It’s officially the New Year, which means, among other things, it will be time to file your taxes.
But in 2020, for the first time in more than three decades, the IRS has given its W-4 form a makeover.
The W-4 form determines how much federal income tax is withheld from your paycheck.
The agency says the revamped design “reduces the form’s complexity” and helps with the “transparency and accuracy of the withholding system.”
Basically, it drops the language of allowances, which may be confusing for some, in favor of a series of questions about your income and dependents.
Essentially, the IRS says the revamp is supposed to make it a little easier for everyone to understand.
Taxpayers now have different filing status choices in the new form.
There are also more options to choose from if you have changed jobs, dependents, or filing status.
The “total number of allowances” section is now gone.
Instead of calculating the number of allowances, which translates into a certain amount of tax withheld (the more allowances, the less money is withheld), the form features questions about your income and dependents.
There is also a new optional “Step 4” section on the new form for other adjustments such as deductions for mortgages.
