By Andrew D. Schwartz CPA
After decades of misleading all but the most straightforward of taxpayers, the W4 form has been replaced with a new W4 form. This is the form you fill out with your employer when you start working that determines the rate you will have federal income taxes withheld from your pay.
The problem with the prior version of the W4 form was two-first.?First, the withholding tables assume that you only have one job. So anyone who works for multiple employers can have a tough time having sufficient taxes withheld.?Work for three employers and earn $20k from each employer, and you’ll have significantly less in taxes withheld than if you work for one employer and earn the same $60k.
Moreover, if you’re married, the withholding tables assume that your spouse doesn’t work.?Its not uncommon for a married couple to owe many thousands of dollars in federal income taxes when both spouses work and both also claim “married” with a few allowances on their respective W4s.
Check out the new W4 form and you’ll see there is a new section called Step 2 that specifically addresses the withholding for people who work for multiple employers and/or for married couples when both spouses work. Will this new W4 form do the trick??Only time will tell. I’ll circle back on this topic next winter when I start preparing tax returns for people who have completed the new W4.?Please stay tuned.