We have made it to 2020 and you know what that means- enough jokes about vision that you’re already sick of them halfway through January!
While you’ve been going through that trial, you may have missed that a new W-4 form has come into play this year. You may have heard that this was coming, well now it is here. If you are curious to see the final product, just click here.
You definitely want to click there if you employ anyone or plan to in the future. Any hires you make should now be filling out this form and not an older form. Those of you who are familiar with these things won’t make an error of mistaking one for the other, for the new one does look quite a bit different.
That different look comes because there are a lot more spaces for information than there were on old versions of the form. It now allows you to adjust for dependents (instead of just claiming a number of exemptions) and account for other income or deductions. So even for your current employees, it might be worth letting them know that this exists and give them the chance to fill out a new form and alter how taxes are being withheld from their paychecks.
I’m going to be honest that although it is a great idea to have a form that allows an employee to look at their total tax picture, it is not going to be crystal clear to everyone how to navigate the form to their best advantage - even after reading all the instructions attached. This is not a real criticism of the form itself, but is more the nature of the tax system itself. After all, things becomes muddled on the form if you’re in as simple a situation as being married, filing a joint tax return with your spouse, and both be working full-time jobs.
So if you still have some questions on the form itself, click here for the full guidance offered by the IRS.
Another easy situation that complicates one’s tax situation is if you earn some or all of your income from being self-employed. This includes something as simple as occasionally driving an Uber. If you get a 1099 form (and they are coming to your mailbox soon), then that is money you have yet to be taxed on and will increase your burden when it comes time to file your return.
So if you have some questions on how to navigate the gig economy, click here for the IRS’s guidance in that area.
At this point, I feel like I may be putting too much information out there at once. So let’s loop back around to the beginning where the new W-4 form is allowing taxpayers to figure out their tax picture better than before. This means that answers about taxes are possible even if they sometimes feel elusive. When it feels overwhelming, though, know that you need not take on this battle alone and we are always happy to help you navigate the system and make it work for you. Now that does sound simple.
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To ensure we don't make the folks at the IRS ornery, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.
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