There's a new W4 Form for 2020 (We are STILL SO Stupid)

[clobber]

Here is the form and here is the FAQ

*sigh*

 

[Gumby]

In my ideal world, I would be able to put in a dollar figure and say "Withhold this much," instead of being forced to find the employer withholding tables and then rigging the form to get the right amount.

 

[target2019]

Including adequate research, filling that out will take an hour or two of my time. Can't wait til I receive one on the job.

 

[Red Badger]

Well, it references employees and jobs throughout the form. Obviously meant for others, as those vile words do not apply to me.

 

[EastWest Gal]

I always had to make adjustments to the old form anyway, especially after 2010 when my investment income became significant.

Now I may see only the occasional 1099 for music work. Done with W-4s!

 

[Dtail]

Well, it references employees and jobs throughout the form. Obviously meant for others, as those vile words do not apply to me.

Amen

 

[jazz4cash]

In my ideal world, I would be able to put in a dollar figure and say "Withhold this much," instead of being forced to find the employer withholding tables and then rigging the form to get the right amount.

+1
The old formula never worked for us and we just had one job each with no investment income. DW claimed zero and I always had extra withheld and we got pretty close to our liability.

Now I just use a flat percentage for all my retirement distributions and it works out even better once I convinced DW to request extra withholding in addition to claiming 0.

 

[audreyh1]

When DH started his consulting business he paid estimated taxes. When we married he continued including my income and withholdings, so I never worried about the W2.

So transition to retirement was easy, except that I took over dealing with estimated taxes.

 

[hulurt1]

I have a part time job every dime go's to tax's Then I do a Roth from my IRA and pay no tax. Need a flat tax..

 

[SecondCor521]

In my ideal world, I would be able to put in a dollar figure and say "Withhold this much," instead of being forced to find the employer withholding tables and then rigging the form to get the right amount.

I agree.

You probably know this, but people can sorta do what you're describing by setting their withholding allowances high (like 10) to get zero withholding by the formulas, and then setting an additional withholding amount to the specific dollar amount they want. Back when I was working, you could do "additional withholding" amounts for both federal and state, and they were both denominated in dollars per paycheck.

 

[SumDay]

In my ideal world, I would be able to put in a dollar figure and say "Withhold this much," instead of being forced to find the employer withholding tables and then rigging the form to get the right amount.

Ditto. DS#2 got married this year and called ask what their withholding should be to reflect their new marital status. I tried to explain how I would do it, and he just groaned and said he'd leave them as is and think about it in 2020.

It shouldn't be that freaking hard. And most people don't really differentiate between what's withheld and what they actually pay in taxes. Folks on this board are certainly not the norm.

 

[LOL!]

It looks pretty darn easy:

Complete Steps 2–4 ONLY if they apply to you; otherwise, skip to Step 5

Step 1 is your name and Step 5 is your signature. Much simpler than the past.

Basically, no allowances or whatever you called them are involved. You just put your expected income and someone else will figure things out for you. Or don't put your expected income and your employer will fill even that in for you.

 

[JustCurious]

In my ideal world, I would be able to put in a dollar figure and say "Withhold this much," instead of being forced to find the employer withholding tables and then rigging the form to get the right amount.

That's exactly what I do...I tell my employer how much to withhold in dollars and they withhold that amount. We outsource our payroll to a nationally known payroll provider and they have the option of setting a specific dollar amount of withholding instead of a percentage, you just have to tell them to do it and they will.

 

[clobber]

It looks pretty darn easy:

My point is, they had a real opportunity to overhaul this thing so that people are not confused. Yes - you can refine things a bit more using the new form. However, that does not reduce the confusion. For example, if I know that my family's tax liability for 2020 is going to be $20k, how exactly do I have $20k withheld?

1) Parts of the form are easier since there is no withholding allowance any more. I do like the fact that it helps people account for the child tax credits.

2) Box 2c is a bit crazy - which it seems you do not have any idea what it is really going to do.

3) And what exactly will they do with the information in box 4a? Are they just going to withhold from that as if it is ordinary income? Answer is yes according to the draft employer instructionsMuch of the dividends (qualified) and capital gains distributions get taxed at a lower rate. Seems like the withholding will be too much.

4) FAQ #8 should have the answer, "You should not want a refund."

5) The online withholding calculator won't let me figure out what should be done for 2020. It is asking for current year withholding so I can make adjustments for 2019.

5) And then telling your employer about additional income you have on 4a? That just seems weird. I get why, but weird. There are instructions in the FAQ for if you don't want to report that info do your employer (again weird) and it includes the following:

"Third, if this is the only job in your household, you can check the box in Step 2(c), which will increase your withholding and significantly reduce your paycheck. The amount of this extra withholding varies across taxpayers and ranges from zero to $20,000 annually—and you may not know how much extra is being withheld. Also, whether this extra withholding in turn is too little or too much—and results in a balance due or refund—depends on the amount of your non-job income."

Ohh yeah, that really helps.

 

[gwraigty]

5) And then telling your employer about additional income you have on 4a? That just seems weird. I get why, but weird. There are instructions in the FAQ for if you don't want to report that info do your employer (again weird) and it includes the following:

"Third, if this is the only job in your household, you can check the box in Step 2(c), which will increase your withholding and significantly reduce your paycheck. The amount of this extra withholding varies across taxpayers and ranges from zero to $20,000 annually—and you may not know how much extra is being withheld. Also, whether this extra withholding in turn is too little or too much—and results in a balance due or refund—depends on the amount of your non-job income."

You're selectively quoting. The full FAQ is this:

13. What if I don't want to reveal the amount of my non-job income, such as income from earnings on investments or retirement income, on my Form W-4 (Step 4(a))?

You are not required to have tax on non-job income withheld from your paycheck. Instead, you can pay estimated tax on this income using Form 1040-ES, Estimated Tax for Individuals. However, if you want to use Form W-4 to have tax for this income withheld from your paycheck and you do not want to report this income directly in Step 4(a), you have several options. First, you can use the Tax Withholding Estimator at www.irs.gov/W4app. The estimator will help you calculate the additional amount of tax that should be withheld from your paycheck. You will then enter that amount in Step 4(c), without reporting the income to your employer. Second, you can determine for yourself the amount of extra withholding needed to pay for the tax on your other income (for example, by using Publication 505), divide that amount by the number of pay dates in the year, and enter the result in Step 4(c). Third, if this is the only job in your household, you can check the box in Step 2(c), which will increase your withholding and significantly reduce your paycheck. The amount of this extra withholding varies across taxpayers and ranges from zero to $20,000 annually—and you may not know how much extra is being withheld. Also, whether this extra withholding in turn is too little or too much—and results in a balance due or refund—depends on the amount of your non-job income.

Also, the online estimator says:

December Estimator Use
During December, the estimator does not offer recommendations for withholding changes because of the limited time remaining to affect the amount you have withheld from your pay.

You can use the estimator to look back at 2019 and determine if you are likely going to owe taxes when you file.
For 2020, we recommend you come back and use the estimator in January.

Currently, DH can go into the system at work to change withholding without having to involve anyone else. Hopefully, when the system updates to reflect the new form, that will remain the same. Otherwise, I'd use the estimator to have additional amounts withheld as suggested above.

 

[W2R]

I retired 10 years ago, and have not even thought about a W-4 since then. Thanks for the memories, I guess?

Instead of dealing with W-4's and withholding, I just send in estimated taxes quarterly, online, using EFTPS. I don't have anything withheld from any of my income streams which are mainly Social Security, Vanguard, and the TSP. I don't have any employment income, obviously.

At first I used the 1040-ES to help me estimate my taxes, but now I base my estimates on last year's taxes. If my estimate is incorrect then they either refund the excess, or else I have to pay more (and possibly get fined, I suppose, but that hasn't happened yet).

 

[The Cosmic Avenger]

In my ideal world, I would be able to put in a dollar figure and say "Withhold this much," instead of being forced to find the employer withholding tables and then rigging the form to get the right amount.

Excuse the tangent, but same goes for retirement contributions! Both my spouse (Vanguard) and I (Fidelity) are required to specify a percentage of pay to withhold, so we wind up going over the maximum, and at least both brokerages will stop your contributions at the cap! Makes for some fatter paychecks at the end of the year, which isn't all bad, but geez, why can't we just specify $18.5K instead of a percentage (that needs to be reduced every year as our salaries go up)?

 

[JustCurious]

Instead of dealing with W-4's and withholding, I just send in estimated taxes quarterly, online, using EFTPS.

What is the difference between paying using the EFTPS system versus paying through the IRS website...

https://www.irs.gov/payments

I suppose they are different ways to pay your taxes, but I don't understand why there are two systems to accomplish the same thing? What is the benefit of signing up for EFTPS as opposed to paying directly using the IRS website which does not require signing up for a username and password?

 

[Offgrid Organic Farmer]

It is interesting that they removed the explanation of 'EXEMPT' from the front page, and added it on the back page.

That is all I have used a W4 for anyway.

 

[W2R]

What is the difference between paying using the EFTPS system versus paying through the IRS website...

https://www.irs.gov/payments

I suppose they are different ways to pay your taxes, but I don't understand why there are two systems to accomplish the same thing? What is the benefit of signing up for EFTPS as opposed to paying directly using the IRS website which does not require signing up for a username and password?

One advantage is that you can only schedule a payment up to 30 days in advance with Direct Pay, whereas you can schedule payments up to 365 days in advance with EFTPS. I prefer to schedule my entire year's payments in one brief 5-10 minute session on EFTPS, and then be done with it. YMMV

 

[JustCurious]

One advantage is that you can only schedule a payment up to 30 days in advance with Direct Pay, whereas you can schedule payments up to 365 days in advance with EFTPS. I prefer to schedule my entire year's payments in one brief 5-10 minute session on EFTPS, and then be done with it. YMMV

Interesting, good to know.

 

[LOL!]

My wife changed her tax withholding for her last paychecks of the year to zero.

She did not have to talk to anyone, but did use an online tool available through her payroll system. Part of the tool is to show a "sample paycheck" after one makes any guesses or changes to allowances on their W-4. She simply kept adding allowances to get to a $0.00 tax withholding.

The mere fact that she could figure this out and get it done without any help tells me that things are not so bad with these forms at all.

 

[clobber]

My wife....but did use an online tool available through her payroll system.

The mere fact that she could figure this out and get it done without any help tells me that things are not so bad with these forms at all.

That's not using the forms.

 

[Gumby]

I can easily figure out my federal income tax for the year ahead and calculate how much to withhold from each paycheck in order to match that liability by the end of the year. I should be able to just put down that number to be withheld, not monkey with the deductions/exemptions until it works out close to what I want.

 

[clobber]

I can easily figure out my federal income tax for the year ahead and calculate how much to withhold from each paycheck in order to match that liability by the end of the year. I should be able to just put down that number to be withheld, not monkey with the deductions/exemptions until it works out close to what I want.

Right - AND you should be able to easily do that at any time of year. "Hey employer, please start withholding so that a total of $23,123 is taken out this year."