Question

The tax pair is more likely to need to increase his or her withholding F here she is married filing jointly and his or her spouse also works if the tax pair chooses to increase his or her withholding here she should complete the option in step 2(b) on the new 2020 form W-4 the taxpayer completes the multiple jobs worksheet on only one form W-4 to determine withholding the withholding amount will be most accurate if after completing the worksheet the tax payer enters that result in which of the following ways on the W-4?

A. divided equally and entered on both taxpayers form W-4

B. entered on the taxpayers form W-4 with the highest paying job.

C. entered on the tax payers form W-4 with the lowest paying job

D. omitted on the tax payer form W-4 and included in estimated taxes.

Answer 1

Certain life happenings, such as getting married, will prompt you to change your tax filing status.

While it may initially feel like a chore, it’s usually a straightforward process. And depending on your circumstances, it may save you money come tax season.

Your filing status determines important factors, such as your tax rates and standard deduction, which is the amount of income that’s not subject to federal income tax. Therefore, having the right filing status can help you get the biggest refund.

ADVERTISING

Changing your status is simple. “All you have to do is alter your filing status when you submit your tax return,” says Marguerita Cheng, a certified financial planner, CEO and co-founder of Blue Ocean Global Wealth.

If you’d like to make changes to the amount of tax you’re withholding per paycheck, you can submit a new W-4 to your employer. “You can do this throughout the year, not just when you file taxes,” Cheng adds.

Before making the change, you must first determine your eligibility for the various filing statuses. For married persons with a living spouse, there are two ways to file:

• Married filing jointly (MFJ): To file jointly means you file a single return, which will include the income and deductions for both spouses.
• Married filing separately (MFS): Each person files their own return, keeping incomes and deductions separate.

Here’s what experts have to say about filing jointly versus separately, plus advice on how to decide what’s right for you.

The benefits of changing your status to ‘married filing jointly’

Filing joint typically provides married couples with the most tax breaks.

Tax brackets for 2020 show that married couples filing jointly are only taxed 10% on their first $19,750 of taxable income, compared to those who file separately, who only receive this 10% rate on taxable income up to $9,875. After that, the rates continue to increase on a marginal basis.

Additionally, the IRS offers spouses who file jointly one of the biggest standard deductions each year, according to TurboTax. In 2019, the standard deduction for a married pair filing jointly is $24,400. Conversely, for those filing separately, the tax break is just $12,200, which is the same as for single people.

Another reason to consider filing together is that joint filers are often eligible to receive meaningful savings in the form of tax credits, such as:

• The Earned Income Tax Credit (EITC), which is designed to “benefit for working people with low to moderate income.” Here’s how to know if you and your spouse qualify, according to the IRS.
• The American Opportunity and Lifetime Learning Education Tax Credits, which reduces the amount of taxes owed by those who are attending college, or have a spouse or child with college or graduate school tuition costs.
• Reimbursement or refund for adoption expenses when legally adopting a child.
• The Child and Dependent Care Tax Credit, which can help offset your child-care costs if you are working and must pay a caregiver to look after your child (so long as they’re younger than 13) or a disabled spouse.

As long as you were married by Dec. 31, 2019, you are eligible to file your taxes jointly, “regardless of whether you were married the entire year or not,” explains Cristina Guglielmetti, a certified financial planner and founder of Future Perfect Planning.

ANSWER A

The new year launches fresh starts, resolutions and, in the case of the IRS, new tax paperwork.

Beginning in January 2020, there will be a whole new look for the W-4 form, which is where workers tell their employers how much money to take out — or withhold — from their paychecks for federal income taxes.

The document overhaul is part of the Trump administration’s changes in the Tax Cuts and Jobs Act, the 2017 law that lowered tax rates, created new exemptions and eliminated others.

Before eyes glaze over at the discussion of tax documents, remember this: setting aside too little money from your paycheck will result in a tax bill to make up the difference. Withholding too much will mean a refund — but some say people shouldn’t be aiming for a refund because that just means they’ve been overpaying Uncle Sam.

Last year, the first year under the Trump tax cuts, many people were disappointed with their refund size and even flipped from getting refunds to owing taxes. That probably happened because they never updated the withholding amounts on their W-4 forms, some experts said.

There are usually lots of eager introductions on a job’s first day, and plenty of important paperwork that can come back to bite you if don’t fill it out with full understanding. Here are some tips on how to handle the new W-4 form.

ANSWER B & C

W-4 form also known as an Internal Revenue Service tax form is filled by an employee in USA to indicate his/ her tax situation to the employer. This gives the employer an idea about how much amount of tax to withhold from the employee’s paycheck.

After filing your tax return, a smart financial move is to double check your Form W-4. Ensuring you have the right amount of tax withheld from your paycheck can make a big difference in your tax outcome next year.

If you have too much withheld, you may receive a huge tax refund. However, that likely means you’re not making the best use of your paycheck.

If you have too little withheld, you could face a big tax bill when you file. Additional penalties and interest could tack onto that total as well if you didn’t pay enough of your tax liability throughout the year.

When it comes to your personal finances, it’s important to take the time to learn about tax forms, like Form W-4, and determine if you need to file a new one.

To help you navigate the process, below are the answers to frequently asked questions about Form W-4.

Why do I have to complete a Form W-4?

The quick answer is: The IRS requires it.

The longer answer is: Form W-4 tells your employer how much Federal income tax to withhold from your pay.

The W-4 requires basic personal information, like your name, address, and social security number. The number of allowances (we’ll talk more about that later) and your filing status will determine how much income tax is withheld from your pay.

You can submit a new W-4 whenever you like. And when you have life changes (i.e. have a child or get married) or your financial situation changes (i.e. you get a pay raise), you should update it. You can use the TaxAct withholding calculator located within each product to see how changes to your W-4 will impact your take-home pay.

Why does my employer withhold so much from my paycheck?

Your employer has no discretion over how much tax is withheld from your pay.

Every employer is required to withhold the amount that corresponds with the IRS withholding tables. The table is broken down based on your pay, the pay period (i.e. weekly, bi-weekly, semi-monthly), and the information on the Form W-4 you completed.

What’s a withholding allowance?

A withholding allowance is a number that your employer uses to determine how much Federal and state income tax to withhold from your paycheck. The more allowances you claim on your Form W-4, the less income tax will be withheld from each paycheck.

The number of allowances you should claim varies. It is based on a number of factors, such as marital status, job status, earned wages, filing status, and child or dependent care expenses.

With the help of TaxAct withholding calculator, you can find the amount of your tax withholding allowances.

Is a withholding allowance the same as a dependency exemption?

No, a tax withholding allowance is not a dependency exemption. However, they are loosely related.

Generally, the more children you have, the more allowances you should claim.

A mistake some people often make is assuming they can only claim as many allowances as the number of children they have. That is not true. In fact, it may be better to claim more allowances than the number of children you have if you have multiple children. However, many other factors aside from children can affect the optimum number of allowances you should claim, including additional income, deductions, or tax credits.

*Note: the dependency exemption was eliminated with the Tax Cuts and Jobs Act of 2017. You can no longer claim a personal exemption for your dependents on your return.

How do allowances affect my paycheck?

The more allowances you claim, the less income tax is withheld from your pay. Fewer or zero allowances mean more income tax is withheld from your pay.

To put it another way:

More allowances equal more take-home pay and money in your pocket.

How much will one additional allowance change my take-home pay?

Using a withholding calculator is the quickest and easiest way to determine how a change in allowances will affect your take-home pay.

But before you make adjustments, don’t forget your state income tax withholding as that will be affected too. When you receive your first paycheck with the new withholding allowances, take note of how they affect your pay. If you believe it’s not the right amount or if your circumstances change, you can always submit a new Form W-4.

Why would I want to check the “Married but withhold as Single” box?

You generally have less Federal taxes withheld when you check the “Married” box. That’s because the withholding tables assume you are married filing jointly with a non-working spouse.

If your spouse has a significant income, you may need to check the “Married but withhold at higher Single rate” box to have enough taxable income withheld.

Should I use the worksheet that comes with Form W-4?

You can use the worksheet on Form W-4. However, there are much easier and more accurate ways to fill out the form.

As mentioned previously, TaxAct can do the calculations for you. You simply answer a few questions, and the program automatically populates the form.

If you decide to use the worksheets, however, this is what you need to know:

• The Personal Allowances Worksheet: This worksheet is used for determining the number of deductions (or “personal allowances”) you can claim. The more allowances you claim, the less tax is withheld from your paycheck. For more information on the personal allowances worksheet, see our guide here.
• The Deductions and Adjustments Worksheet: If you plan to itemize deductions, the deductions and adjustments worksheet will help you determine what you can deduct. Income adjustments, like student loan interest or retirement contributions, can also be included. This step is meant to be an estimation of your tax liability and can be different than what you actually claim on your tax return.
• Two-Earners/Multiple Jobs Worksheet: This section is for people with multiple jobs or married people who both work. It calculates how much money you should withhold from your paycheck based on the additional income from having multiple jobs or earners.

Is it better to have more earned income withheld, just to play it safe?

Choosing to have too much tax withheld may feel safer and easier than figuring out how much you should withhold and how to complete the form. However, there’s nothing safe about letting the IRS hold your money for a year or more completely interest-free. The small investment of time to make sure your income tax withholding is correct is well worth it.

At the same time, some taxpayers don’t want to risk having a tax bill at the end of the year – no matter how small. If that’s how you feel, adjust accordingly, provide your revised W-4 form to your employer, and plan for a small tax refund.

You can still celebrate when you get your tax refund check. Plus you can be happy knowing you didn’t have too much tax withheld.

How do I file a new Form W-4?

Your payroll department can supply a form if you ask. You can get the form directly from the IRS’ website too. Additionally, if you use TaxAct to calculate your withholding allowances, you can print the Form W-4 when you are done.

Once the form is completed, don’t send it to the IRS. Give it to your payroll or human resources department.

Why shouldn’t I have more tax withheld and receive a big refund at the end of the year?

To make the best use of your money, try to pay the right amount of tax throughout the year by having the correct amount withheld. For instance, if you have an emergency, the money will be in your savings account – not in the IRS’ bank account. Essentially, you’re giving the IRS one big, interest-free loan.

Look at it this way, if you have credit card debt, you may be paying high-interest rates while trying to pay it off. The IRS pays no interest to you for the money you give them by having too much tax withheld. You can use that extra money to pay down your credit card instead.

You wouldn’t overpay your mortgage, electric bill, or any other expense by thousands of dollars just so you can get a big refund at the end of the year. Why would you want to do that with your taxes?

ANSWER D

If you worked as an employee last year, your employer must give you a Form W-2, Wage and Tax Statement. This form shows the amount of wages you received for the year and the taxes withheld from those wages. It’s important that you use this form to help make sure you file a complete and accurate tax return.

Most employers give Forms W-2 to their workers by Jan. 31. If you haven’t received yours by mid-February, here’s what you should do:

1. Contact your employer. You should first ask your employer to give you a copy of your W-2. You’ll also need this form from any former employer you worked for during the year. If employers send the form to you, be sure they have your correct address.
   
2. Contact the IRS.  If you exhaust your options with your employer and you have not received your W-2, call the IRS at 800-829-1040. You’ll need the following when you call:
   • Your name, address, Social Security number and phone number;
   • Your employer’s name, address and phone number;
   • The dates you worked for the employer; and
   • An estimate of the amount of wages you were paid and federal income tax withheld in 2013. If possible, you can use your final pay stub to figure these amounts.
     
3. File on time. Your tax return is due by April 15, 2014. If you don’t get your W-2 in time to file, use Form 4852, Substitute for Form W-2, Wage and Tax Statement. Estimate your wages and withheld taxes as accurately as you can. The IRS may delay processing your return while it verifies your information.

If you need more time, you can apply for a six-month extension to file your federal tax return. The easiest way to apply is to visit IRS.gov and use IRS Free File to e-file the extension. You can also mail Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. Make sure you file your request by midnight on April 15.

You may need to correct your tax return if you get your missing W-2 after you file. If the tax information on the W-2 is different from what you originally reported, you may need to file an amended tax return. Use Form 1040X, Amended U.S. Individual Income Tax Return to make the change.

Please give the Good Feedback (Thumbup)