April 15th has come and gone. Hopefully, you didn’t end up having to pay, and by that date all of your 2018 taxes are behind you.
Next up — this year’s challenge.
It appears the IRS will be implementing more changes based on the tax reforms enacted for the 2018 earning year. The change that will impact most of us has to do with what is withheld from your check.
A new W-4 form is going to be issued that the IRS says better balances what is withheld from your check to what ought to be withheld. In other words, you shouldn’t end up owing and the IRS ought not end up owing you.
That form is currently under construction.
Pete Isberg works for the payroll and human resources consulting company, ADP. He says the new form makes the simple more complex, and filling it out will be almost like doing your taxes all over again.
Isberg noted the final form hasn’t been released yet but he and other tax preparation companies and payroll firms have seen a draft. “It’ll be a much bigger pain,” he said. “The accuracy will be 100 percent, but the ease-of-use will be zero.”
The purpose of the release of the draft was to get feedback from them. Isberg said the form asks for:
• Non-wage income like interest and dividends
• What you’ll itemize and other deductions
• Income tax credits expected for the tax year
• Those with multiple jobs to estimate annual wages
“It looked a lot more like the 1040 than a W-4,” Isberg says.
In fact, the new form — he says — is so complex that it references 12 IRS publications that will help you fill it out. The worry of his company and others is confusion. Employers will be confused as to what it should contain and so will employees.
Training will likely be required.
Isberg also noted that some worry that the form probes into issues that workers might not want to share with their employers like how much their spouse makes, or whether they have another job on the side.
IRS spokeswoman Anny Pachner said those concerns are being taken into account and the next version — in May of this year — will make some changes. In the meantime, “We encourage taxpayers to take advantage of that opportunity and send us comments on the redesign,” she said.
Once those comments are received, a changed version will be released mid-summer.
That may not help. Kathy Pickering of the H&R Block Tax Institute said you’ll need a tub load of information to fill out the form. They include past 1099 forms, paystubs from last year’s earnings and more; things like:
• Your filing status
• Number of dependents
• Information about your itemized deductions such as home mortgage interest, state and local taxes, and charitable deductions
• Earnings from all jobs
• Information about non-wage income such as business income, dividends, and interest
“If you’re married, and both you and your spouse work, it will also be helpful to know information about your spouse’s income,” she also pointed out.
Plus, adding to the complication, states are also looking at new withholding forms.
Source link: MSN Money