When you start a new job you fill out a form so your employer knows how much of your income to send to the Feds for taxes. This is based on brief information you add to a worksheet and get a number. This number determines how much of your money is set aside based on your marital status, likely exemptions based on children etc.
A new form aims to be more accurate and seems like a great idea until you look at the details.
The new form, again trying to be more accurate, will take a crystal ball to accurately fill out. The IRS will want you to estimate your earnings for the year, tax dividends, interest paid and deductions. Seems easy enough…but isn’t that what we do at the END of the year anyway?
Yes, the new W-4 will be like a tiny little tax season if the new form is adopted as drafted. Who has the time to sit down and do their taxes twice?
Year Round Tax Planning
Part of our Tax Planning program offers help preparing these forms and keeping track of where you are as the year progresses. Tax time isn’t the time to suddenly realize you owe thousands or even get a refund of thousands (that was your money all along remember) it is the time to see how close your tax pro got to what the plan showed.
The new W-4 asks you to estimate your earnings based on last year and what you think this year will look like. Part way through the year you get promoted and find out you’re having another baby. Guess what? You get to do another little tax season to try to anticipate your new withholding amount. No one wants to do taxes more than once.
What to do next
If you used KMS Tax Prep we’d not only know what your anticipated tax liabilities are on January 1, but each day moving forward and can guide you on what to withhold for Uncle Sam and what you can keep to invest, save, or buy something nice.
Maybe you just want a Check Up? We do that too!
Is the W-4 perfect? No, but the new form is far more complicated and gets you no closer to your goal than guessing.
Take the guesswork out of taxes, set up a free phone call with KMS Tax Prep and find out if your withholdings for 2019 need to be adjusted. After all, we’re already almost 1/2 way through the year!