the new w4 form

Technical topics regarding tax preparation.
#21
Wiles  
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All change is good. Even if it kills you.
 

#22
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brute force wrote:hi missingdonut, thank you for that. would u like to elaborate on how the new W4 makes it easier and accurate? i do not see it. i think the older one was easier and accurate.


The old one was not accurate at all, especially for multiple earner households. We just made do with its limitations -- most of my clients were married at home but single at work. An allowance is just trying to shoehorn deductions, credits, and filing statuses into blocks of $4250 deductions. For example:

2019 W-4 wrote:Child tax credit.
• If your total income will be less than $71,201 ($103,351 if married filing jointly), enter “4” for each eligible child.
• If your total income will be from $71,201 to $179,050 ($103,351 to $345,850 if married filing jointly), enter “2” for each
eligible child.
• If your total income will be from $179,051 to $200,000 ($345,851 to $400,000 if married filing jointly), enter “1” for
each eligible child.
• If your total income will be higher than $200,000 ($400,000 if married filing jointly), enter “-0-” .


That's for a $2,000 credit. But now, you can actually pinpoint the correct amount of tax to withhold. You choose the correct filing status. Then you adjust with direct reductions to annual withholding on line 3 (such as the child tax credit or tuition); extra annual income, line 4a; extra annual deductions, line 4b; extra per-paycheck withholding, line 4c. So much easier to get accurate withholding.
 

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