The
Internal Revenue Service released the 2020 draft for Form W-4 on May 31, 2019.
For most taxpayers, the draft of the 2020 W-4
intends to simplify the process of reporting the amount of federal withholding
an employee wants from each paycheck. Anyone who wishes for a more accurate
calculation of their federal withholding can answer a set of straightforward
questions on the worksheets.
Two other ways to handle withholding are to use worksheets for
individuals with other sources of income who wish to calculate additional
withholding amounts. The employer will not be provided these sheets, thus
assuring the taxpayer’s privacy. An employee can also use a Withholding
Calculator to determine the most accurate withholding.
In the draft 2020 W-4, there are no more allowances but, rather,
a shift toward dependents and deductions to align with the new tax law.
For example, the Child Tax Credit increased to $2,000 for children
younger than 17 (and $500 for other dependents). Some itemized deductions that
are still on the books include qualifying home mortgage interest, charitable
contributions, state and local taxes (SALT), and medical expenses in excess of
10 percent of one’s income. However, due to the changes in the tax law,
significantly fewer people will itemize deductions because of the increase to
the standard deduction, as well as the cap to SALT ($10,000).
Source: Paychex
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