On Your Side: What to know about new IRS W-4 form
It could make the difference between writing Uncle Sam a check or pocketing a tax refund. There's a new W-4 form and it's dramatically different than years past. All because of the Tax Cuts and Jobs Act.
This is the form that determines how much federal income tax is withheld from your paycheck.
"You may have to take a couple of runs at reading the language and make sure you are careful about reading the 'ands and the ors' because they indicate different things," said Tiffany Cossey, Drury University.
Tiffany Cossey, a tax professional, says take your time.
There are just a few steps. You're working with real income numbers and you might use a chart.
"They're trying to help you estimate a chunk of tax to put on your W-4," she said.
No more big refunds.
"The goal of every taxpayer should be to break even. I know a lot of people like getting those big refunds at the end, but what's happening is you don't have use of your money at the time," said Cossey.
If you have a side hustle, Uncle Sam needs to know.
"If a person sells on eBay or drives for Uber, those entities are not necessarily withholding from taxes. When you report that income at the end of the year you could end up being under withheld. But if they make the appropriate adjustments on the W-4, then that will help to make sure enough taxes are withheld so that a person doesn't pay penalties and interest in underpayment at the end of the year," said Cossey.
Claim your kids on step three. In step four, list other income, like investments or retirement.
Cossey says everyone should fill out the new W-4, especially if someone in the household gets a new job.
There's a new IRS withholding calculator online. Make sure you have your pay stub handy.