The New Jersey Society of Certified Public Accountants (NJCPA) reminds taxpayers to review their current federal income tax withholding from their paychecks, particularly as the IRS is issuing a new Employee’s Withholding Allowance Certificate (Form W-4). The IRS issued a draft 2020 Form W-4 in May and expects to issue a final version in November.
The new W-4 was created to take into account changes made following the 2017 Tax Cuts and Jobs Act (TCJA) and to provide a simplified version of the form for taxpayers and employers.
Many taxpayers discovered they did not have enough federal tax withheld when filing their 2018 tax returns earlier this year. The IRS Paycheck Checkup calculator can help taxpayers determine how they should be adjusting their withholding amount so that employers can withhold the right amount of tax from paychecks.
Taxpayers can still file the 2019 W-4 Form currently, but the IRS recommends using the new W-4 starting in 2020 and completing a new W-4 each year. Employees usually fill out a W-4 when first hired.
“With so many state and federal tax changes, it’s advisable for taxpayers to keep abreast of their own finances and review how much is being taken out of their paychecks; otherwise, they may end up with unwanted payments at tax filing time,” said Ralph Albert Thomas, CPA (DC), CGMA, CEO and executive director at NJCPA.