Starting in 2020 a new W-4 Employee’s Withholding Certificate is required for new employees. A W-4 is the paperwork required for payroll services to inform what percentage of your pay to be withheld for taxes. This form is a requirement and when filled out correctly, it means that when you file taxes for that year, you generally owe very little in taxes or get a small refund.
For a single income household, with or without children, this form can be a breeze. However, if you have more than one job and/or your spouse also works, it becomes a little complicated. The IRS acknowledges that if there is more than one income in the household, then current withholding tax may be inaccurate.
There are two extra income options – two incomes and three plus incomes. There are three handy dandy charts and using the one for your tax status, choose the intersection of the highest and the lowest income and use that number on the form. The amount withheld for taxes will be most accurate using this form if you and your spouse fill out the new W-4 for all your jobs and claim dependents on the W-4 for the highest paying job.
In addition, everyone gets a chance to have a little more or a little less withheld, using the Adjustments at bottom of the W-4. This is for income that does not have tax withheld and if you take more than the standard deduction when filing your taxes.
If this is all too overwhelming, there is another choice when filling out the W-4. Go to IRS website for the W-4 at www.irs.gov/W4App. If you go this route, have your last paystub in hand. It will walk you through the steps and turn red when you miss one. The results of the estimator will tell you if you will owe taxes or get a refund at tax season. Brilliant!