The IRS has released the W-4 form for 2019
Due to the Tax Cuts and Jobs Act, the IRS has updated the W-4 to reflect the many tax changes. You may be wondering if there will be major differences.
Here’s the breakdown
Right off the bat, when comparing the 2018 W-4 and 2019 W-4, it looks similar. However, there are changes in income thresholds along with calculations. This also applies to changes from tax credits to allowance tables for two-earners/multiple job holders.
Personal Allowances Worksheet
To calculate your allowances, the first sheet you see is the Personal Allowances Worksheet. Typically, taxpayers with a simple tax situation who do not need to itemize, have no dependents and only work only one job just fill in this first sheet and leave everything else blank.
On the other hand, for those with a dependent, the Child Tax Credit (CTC) section’s (Located on E) income thresholds increase to the following:
- Your total income will be less than $71,201 ($103,351 if married filing jointly)
- Total income will be from $71,201 to $179,050 ($103,351 to $345,850 if married filing jointly)
- Total income will be from $179,051 to $200,000 ($345,851 to $400,000 if married filing jointly)
- The CTC remains to phase out at higher than $200,000 ($400,000 if married filing jointly)
Other Dependent Care Credit (ODC)
The thresholds increase to the following:
- Total income will be less than $71,201 ($103,351 if married filing jointly
- Total income will be from $71,201 to $179,050 ($103,351 to $345,850 if married filing jointly) for every two dependents
- The ODC phases out at higher than $179,050 ($345,850 if married filing jointly) as usual
Deductions, Adjustments, and Additional Income Worksheet
If you know you’ll be itemizing your deductions, claim certain adjustments or have a large amount of non-wage income, you will need to complete this sheet.
A new adjustment to income was also added. You will now have to estimate the newly qualified business income deduction.
Do you hold multiple jobs or both you and your spouse work?
Let’s say you have multiple jobs or you’re married filing jointly, the income threshold increases to fill out the Two-Earners/Multiple Jobs Worksheet.
As you know on the W4, there are two tables for the lowest and highest paying jobs which differ compared to 2018.
Click here to scroll down on the 2019 W-4 to view these tables.
Claiming Exempt
You can claim exempt to have no taxes taken out of your paycheck throughout the year. You can only claim exempt if:
- For 2018 you had a right to a refund of all federal income tax withheld because you had no tax liability, and
- For 2019 you expect a refund of all federal income tax withheld because you expect to have no tax liability
The same rules apply this year for exemptions. Check out our blog on claiming an exemption on your W-4 by clicking here.
Make sure you complete your form accurately
In addition, when filling out your W-4, ask your employer or payroll department if you’re confused about your tax situation. On top of that, make sure all your prior year tax returns are up to date to prevent the IRS from garnishing your wages.
