The IRS is at it Again - More Changes Coming Our Way!
The IRS has been busy this past year! Not only have they sent numerous ACA Employer Shared Responsibility Payment Letters (aka Penalty Letters) for 2015, with the 2016 letters just now being released, they have also drafted a new Form W-4 for 2019 and a new Form 1040 for your tax filing in 2018.
This “busyness” of the IRS has created angst and worry among payroll professionals and it should create angst and worry with individual taxpayers, but not everyone is aware of the impact of these changes.
First, the IRS created a new withholding calculator. The Tax Cuts and Jobs Act (TCJA) tax reform bill that was signed into law back in December of 2017 changed not only the tax tables but eliminated some deductions that businesses and individuals could take on their tax filings. The new tax withholding calculator ( which can be found here ) is difficult at best to navigate. You will need your most recent paystub as well as a copy of your 2017 tax filings in order to use the calculator to determine if you are having enough taxes deducted for this current tax year (2018). Because the tax tables were not updated until Feb of 2018, the amount of taxes being deducted changed and the deductions that were eliminated, the IRS is concerned that many taxpayers are going to find themselves coming up short at tax time and may end up owing money.
Now enter the new W4 that the IRS has still in draft form dated June 5, 2018. They had a comment period for 60 days, and are now working on a revised draft form which they anticipate releasing in Sept. of this year, with the final form completed by late October, early November. The new W4 has a totally new look to it. The TCJA eliminated the personal exemptions which means individuals will not be claiming their withholding exemptions as they have done in the past. This new form regardless of how the final draft is released, will cause confusion and lots of questions from employees.
For the 2018 tax filing year, the IRS has also released a draft version of the new 1040 form. This new form will replace the current 1040,1040A and the 1040EZ supposedly making it easier for individuals to fill out. However, the form itself may be shorter, but there are now 6 new schedules that may have to be filed with the form. To review all the new draft forms and schedules – Click Here (and search for 1040).
With the new W4 form, the new tax law (TCJA) and the new 1040 filing forms, the 2018 tax year is bound to be a huge learning curve for everyone.
For further information visit the IRS info page on W4s.