How you feel about the Tax Cuts and Jobs Act at this point probably largely has to do with how your tax return looked this year. The numbers from a country-wide standpoint said that things largely remained unchanged from the government’s standpoint. That does not, however, mean that there were not some big changes on a personal level.
That’s why in the time since the tax season ended I have written a bit about being proactive and making changes to help your own situation. It would take some huge surprises for the rules to change again before next year. So you need to do what you can to leverage your situation underneath the current system.
Possibly in an actual bit of surprise, though, the IRS may be helping with this.
Over the last week, the agency has issued a draft of a new W-4 form. Remember that form you filled out when you started your job to say how you wanted your taxes handled and then never thought about again? Yeah, that form.
The changes here are largely due to the TCJA, so allow me to get a little tax jargon-y for only a paragraph. That W-4 form you may still vaguely remember was based on withholding allowances, which was tied to the amount of the personal exemption. This is why it had a little questionnaire about your family and life situation to help you determine how you may want to fill out the form. This worked pretty well for most people. The revamped rules, though, have led to a more complicated form, but one that will be better at actually taking into account your personal situation.
First, let me state that this new W-4 is a draft only. The real form will only come out later this year. Also, it will be for the year 2020 so any changes you want to make for this year must be done on a current form. It is still worth looking at the changes made, though.
One of the new things on the draft version of the form is the ability to account for multiple jobs. This even includes if you are married filing jointly and both you and your spouse work. This is key because your total income could be much higher than what you earn at the job for which you are filling out the form.
In the same vein, there will also be spots in include income earned from other areas and possible deductions. This is a much fuller version of your total tax picture than was seen on the W-4 form in the past (although you also had the opportunity to withhold additional amounts of money if you so chose).
This new form is a bit more complicated and will take a little more work to accurately fill out. This may feel daunting, and it could even be argued that it will increase the chance of errors. The idea, however, is that it is designed to give a fuller picture and more accurately report what should be withheld form one’s paycheck to fulfill your tax obligation. These are only good things.
Accomplishing good things aren’t always something you can do on your own, though, so as always we remain here to help you make your tax picture work to your best advantage, even if that involves filling out some new forms.
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