IRS Form W-4 Remains Profoundly Complicated

IRS Form W-4 profoundly complicated but it does not have to be that way. Resist the urge to over think.

When I first looked at the Form W-4 Employee’s Withholding Allowance Certificatemy initial reaction was RAGE. Yes, RAGE!

When you view the form you will see that you now enticed to report FOR THE LOVE OF THE ALMIGHTY two very private pieces of data to YOUR EMPLOYER:

1. ALL other income earned outside your job
2. TOTAL itemized deductions.

Your employer has no business knowing this information about you!

What is happening?

Thanks to the eukaryote dimwits in charge (e-DICs) in 2017, the budget busting, deficit exploding Tax Cut & Jobs Act (TCJA) now requires that YOUR EMPLOYER calculate YOUR income tax withholding in a different way than before.

This is accomplished by imposing upon you in exchange for gainful employment an obligation to prepare, sign (under penalty of perjury) and submit to your employer IRS Form W-4.

Because the NEW REGIME W-4 relies on other non-wage income, deductions and tax credits as opposed to SIMPLE allowances like in the good old days – 🙂 you are now enticed to share with your employer things that your employer may have previously not known about you or worse still…

things that you may not want your employer to know about you!

Why is this important?

• Disclosing private information about your unrelated sources of income to your employer says a LOT about whether you really need the job – aka degree of commitment.
• Disclosing deductions and credits to your employer defines the engagements outside the job – aka potential for distractions.

The IRS stated that the focus of the form is to move away from the number of withholding allowances to more direct reporting of adjustments to income. Never mind the fact that we are now enticed to disclose things to our employer that is NONE OF THEIR BUSINESS!

Your employer already knows ENOUGH about you. Do they really need to know how much $$ you make outside your job or how much in deductions or credits you claim?

The IRS is claiming that you can indeed use THEIR withholding calculator which has improved remarkably over the last several years. But it can be a mind numbing waste of time.

General W-4 Form prep guidance if you are compelled to have maximum withholding from you pay due to side gigs or other self employment income or other income producing assets:

• Step 1 – Assert that your filing status is Single or Married Separate – even if otherwise
• Step 2 – Ignore altogether
• Step 3 – Claim no dependents even if you have said dependents.
• Step 4 – Ignore altogether

Then be sure to estimate the income tax implications of your other investments and be sure to make quarterly federal and state estimated income tax payments.

General W-4 Form prep guidance if you do not have other self employment income or other income producing assets

• Step 1 – Assert your filing status as you intend to file
• Step 2 – Ignore altogether
• Step 3 – Claim all dependents
• Step 4 – Ignore altogether

If you seek guidance on how to prepare this form, please feel welcome to contact me anytime at your convenience.