In its first major overhaul in more than three decades, the W-4 form, which tells employers how much federal income tax to withhold from an employee’s paycheck, has dropped the withholding allowances portion of the form. In a recent news story, MWE tax senior manager Jennifer Bobé talks to Newsday about the form’s new five step process which many believe will help employees more accurately determine withholdings moving forward.
5 steps for employees
The form is broken down into simplified steps with only Steps 1 and 5 required. Step 1 is personal information such as name, address and Social Security number, and Step 5 is for an employee’s signature and date, says Jennifer Bobé, a senior tax manager at Margolin, Winer and Evens in Uniondale.
Employees fill out steps 2 through 4 if applicable or if they want their withholding to be more exact, she says.
For instance, Step 2 applies if the person has multiple jobs or both the employee and spouse work and they file jointly; Step 3 deals with credits for children and other dependents (credits such as education or foreign tax credits can also be incorporated into this step); and Step 4 permits an employee to factor in additional items such as other income, deductions other than the standard deduction, and additional withholding, Bobé says. Read More>>>