IRS Releases New Draft Form W-4
The IRS issued a statement confirming that “the Treasury Department and the IRS will incorporate important changes into a new version of the Form W-4, Employee’s Withholding Allowance Certificate, for 2020.”
Here’s what the draft form W-4 for 2020 looks like:
You can see a full-sized version on the IRS website here (downloads as a PDF).
The new draft reflects changes under the Tax Cuts and Jobs Act (TCJA). In addition to the new tax rates, the TJCA made significant changes to itemized deductions normally claimed on a Schedule A and eliminated personal exemptions. As a result, current withholding schemes were not adequate for all taxpayers, causing the General Accounting Office (GAO) to warn taxpayers that unless they adjusted their withholding, they would owe taxes.
The concern eventually resulted in an announcement from the IRS that penalty relief might be available. In March of 2019, the IRS expanded the relief for those taxpayers making payments of at least 80% of the tax shown on the return for the 2018 taxable year. (You can find more from Ashlea Ebeling here.) Despite the penalty relief, concerns about withholding remained. That’s why the form W-4 revisions remained a priority.
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