Check Out the New W-4 Tax Withholding Form. Really.

But allowances were based on personal exemptions — an amount of money you could deduct for yourself and for each of your dependents — and those are now unavailable to taxpayers under the new tax law.

Instead, the new form takes workers through five steps that aim to account for all sources of income — including second jobs, a spouse’s job, self-employment income, and even income from things like dividends and interest — to determine the correct withholding amount. Employees also enter information about dependents and tax deductions to fine-tune withholdings.

“It’s like a mini income tax return,” said Andy Phillips, director of HR Block’s Tax Institute.

Some workers may be leery about alerting employers to second jobs or sharing details about investment income, said Kelley Long, a consumer financial education advocate with the American Institute of Certified Public Accountants.

To address those concerns, the form allows workers to use the I.R.S.’s online tax withholding estimator tool or to complete a printed work sheet to determine how much to withhold. The amount is entered on a separate “extra withholding” line, without details about how it was calculated. (Data from the estimator and the work sheet are not shared with the employer.)

Workers may also calculate the amount and then make separate, estimated tax payments to the I.R.S., independent of paycheck withholding.

The withholding estimator asks detailed questions, so it’s helpful to have last year’s tax return handy along with your most recent pay stub. Because new employees may not have the documents at work or may want to confer with a spouse, Mr. Isberg suggests that employers give new hires extra time to fill out the form — perhaps by letting them take it home.

Alternatively, if new employees are rushed for time, they can simply fill out the first step of the form — which asks for their name, address, Social Security number and filing status — and sign it (Step 5), Mr. Isberg said. Then, after reviewing their withholdings at their convenience, they can submit a revised form to make any necessary changes.

Article source: https://www.nytimes.com/2019/12/13/your-money/new-w-4-form.html?emc=rss&partner=rss