Tiny
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Post by Tiny on Apr 9, 2019 11:14:00 GMT -5
Not sure how I feel about this... I'm not really sure I want to tell my employer about all my sources of income so they can withhold the correct amount... Here's the skinny: "The agency plans to release a new W-4 form that better incorporates the changes ushered in by the new tax law so that the amount held back for taxes in each of your paychecks is more accurate. The agency’s goal: A taxpayer shouldn’t owe or be owed come tax time." "Instead of claiming a certain amount of allowances based on exemptions – which have been eliminated – the draft form asked workers to input the annual dollar amounts for: Nonwage income, such as interest and dividends Itemized and other deductions Income tax credits expected for the tax year For employees with multiple jobs, total annual taxable wages for all lower paying jobs in the household “It looked a lot more like the 1040 than a W-4,” Isberg says. " What do you think about it? www.msn.com/en-us/money/taxes/the-irs-is-changing-paycheck-withholding-and-itll-be-a-doozy/ar-BBVL5zL?li=BBnb7Kz
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grumpyhermit
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Post by grumpyhermit on Apr 9, 2019 11:19:15 GMT -5
If the withholding calculator is "too complicated" how do they think people are going to be able to figure out this form?
I'm not really a fan of my employer knowing any more about me, and my financial situation, than is absolutely necessary.
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justme
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Post by justme on Apr 9, 2019 11:20:50 GMT -5
Payroll doesn't need to add a ridiculously complicated thing to what they have to do.
And I don't like having to give employers that much insight into my life. I mean some like married or kids they more or less know already, but the rest -- don't need to give them more ammo to possibly sway pay/promotions.
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bean29
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Post by bean29 on Apr 9, 2019 11:31:21 GMT -5
I already have 21% withholding on my paycheck for FWH and 25.6 % for state. 13.5 for HSA and 10% for 401K
My take home is 22.8 % of my Gross. But they could take my whole check to cover my husband's tax obligation from self employment earnings.
I pay monthly estimated tax payments to the IRS also. They are actually more than my Monthly gross.
Soon, I will bump up my 401K to 20% and my take home will get even smaller.
I guess it makes sense that the exemption way of figuring out your tax withholding needs to go, but people did not understand the old way of doing it. Most people will need their Tax preparer's help to complete the form, or to use a program like Turbo Tax. I actually use a combination of last year's return and my gut to decide my estimates. I don't think the form as described will help me.
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myrrh
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Post by myrrh on Apr 9, 2019 11:31:24 GMT -5
It figures. We always get money back from the feds and owe the state a little, but this past year it was close to the "owe too much so pay a fine to the state" zone. The IRS W-4 calculator is not helpful to me so I've been changing it the hard way (three rounds of giving a new W-4 to HR person and seeing the effects in my paystub.) I think I finally have my W-4 the way I want it. They better not change it on me again.
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Tiny
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Post by Tiny on Apr 9, 2019 11:37:07 GMT -5
Payroll doesn't need to add a ridiculously complicated thing to what they have to do. And I don't like having to give employers that much insight into my life. I mean some like married or kids they more or less know already, but the rest -- don't need to give them more ammo to possibly sway pay/promotions. Or perhaps hire/fire decisions. This puts a lot more "security" and "confidentiality" on people who really shouldn't have to worry about maintaining that kind of level of mindfulness about how MUCH info they know about other people. Being an employee of a big employer - it makes me uncomfortable to have to give the information = but I can kind of "get lost in the shuffle". I don't ever really see the HR people and there's that "lost in the shuffle" aspect so the HR department people/person probably isn't hobnobbing (or just hinting) with all the other employees in the company about ME. I'm pretty sure the info isn't going to get talked about over beers or to one of my coworkers. The thought of working for a small company and having to disclose so much of my personal financial info to my employer makes me squirm. That's a lot of info (and judgement and perception changing info) to be imparting to someone who's not that far removed from me and my coworkers.
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myrrh
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Post by myrrh on Apr 9, 2019 11:44:16 GMT -5
If only they would change it to: Look at refund/amount owed in taxes last year. Are you happy with it? If not, what is the difference between what you got and what you want? Divide that difference by # of paychecks you expect to get. Then fill out the form. W-4 Form Add/subtract $__ per check to federal withholding Add/subtract $__ per check to state withholding Is that too complicated?
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Tiny
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Post by Tiny on Apr 9, 2019 11:46:36 GMT -5
I'm wondering how this will effect people in professional jobs with income generating side hustles. I think many employers frown on "moonlighting".
How does that play out if you have to tell your main employer about your second (or third or fourth) job so the correct amount can be withheld?
How does it play out when you have to tell your other employers that you work for XYZ company during the day and earn $X so they can withhold the correct amount?
How much more paper work does this put on employers? (especially small employers? )
Will more employers just go to '1099's' to simplify things for themselves?
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chapeau
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Post by chapeau on Apr 9, 2019 11:46:43 GMT -5
I think this is going to be a nightmare. Both my husband and I have unpredictable 1099 income. Heck, how am I supposed to know what the Federal Reserve or the stock market is going to do, wrt estimating dividend and interest income. Or, for that matter, what kind of expenses I might face that would cause me to spend savings or sell stock. I suppose it’s a nice goal, to neither a borrower nor a lender to the IRS be, but I’m not sure it’s feasible.
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Post by The Walk of the Penguin Mich on Apr 9, 2019 12:09:09 GMT -5
When I had a single income with just a little interest income, no dependents and few deductions, my tax forms were one page and I think that the most I ever received was $200. A few years it was 0, and one year I had to write a check to the state of KY for $3.
Now, our tax forms are 1/2” thick. I have both taxed and untaxed disability income, more investments and TD has a salaried income, interest income, dividend income and variable deductions. A stock sale last year had us scrambling 3 days before 4/15 to come up with massive $$$......and that stock sale was something we had absolutely no control over (and it truly f#$&ed both of us up).
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alabamagal
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Post by alabamagal on Apr 9, 2019 12:13:50 GMT -5
I also think it is solving a problem that is not really there.
Based on comments this tax season, it is obvious that most people only care about getting a refund and not about paying taxes. I read somewhere that everyone knows what their refund (or amount owed is) but most don't know how much taxes they are paying.
The proposal just really complicates something that most people don't even understand. Under the current system, anyone can adjust their withholding based, and make adjustments during the year as needed. There are online tax estimators (even on the IRS website) that can help you get close to $0 owed for anyone that wants to be there. The current system allows you to enter exemptions without any back up material, and also allows you to withhold additional amount.
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pooks
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Post by pooks on Apr 9, 2019 12:43:00 GMT -5
I also think it is solving a problem that is not really there. Based on comments this tax season, it is obvious that most people only care about getting a refund and not about paying taxes. I read somewhere that everyone knows what their refund (or amount owed is) but most don't know how much taxes they are paying. I am also really curious what the employer is going to be inputting and how that calculation is going to work. Right now it is just withholding number, filing status, and a box for any extra withholding (in my limited payroll experience). That is simple and the software calculates off that. How many boxes are the employers going to need to fill in now to accurately calculate. We won't change ours or tell employer about other income. I already account for the added income in a different withholding that I set as a percentage.
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Tiny
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Post by Tiny on Apr 9, 2019 12:48:34 GMT -5
I also think it is solving a problem that is not really there. Based on comments this tax season, it is obvious that most people only care about getting a refund and not about paying taxes. I read somewhere that everyone knows what their refund (or amount owed is) but most don't know how much taxes they are paying. I am also really curious what the employer is going to be inputting and how that calculation is going to work. Right now it is just withholding number, filing status, and a box for any extra withholding (in my limited payroll experience). That is simple and the software calculates off that. How many boxes are the employers going to need to fill in now to accurately calculate. We won't change ours or tell employer about other income. I already account for the added income in a different withholding that I set as a percentage. Here's from the article: (you'll be giving your employer some of the same info you use on your 1040 form: ) "Instead of claiming a certain amount of allowances based on exemptions – which have been eliminated – the draft form asked workers to input the annual dollar amounts for: Nonwage income, such as interest and dividends Itemized and other deductions Income tax credits expected for the tax year For employees with multiple jobs, total annual taxable wages for all lower paying jobs in the household “It looked a lot more like the 1040 than a W-4,” Isberg says. "
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Post by The Walk of the Penguin Mich on Apr 9, 2019 12:59:29 GMT -5
I am also really curious what the employer is going to be inputting and how that calculation is going to work. Right now it is just withholding number, filing status, and a box for any extra withholding (in my limited payroll experience). That is simple and the software calculates off that. How many boxes are the employers going to need to fill in now to accurately calculate. We won't change ours or tell employer about other income. I already account for the added income in a different withholding that I set as a percentage. Here's from the article: (you'll be giving your employer some of the same info you use on your 1040 form: ) "Instead of claiming a certain amount of allowances based on exemptions – which have been eliminated – the draft form asked workers to input the annual dollar amounts for: Nonwage income, such as interest and dividends Itemized and other deductions Income tax credits expected for the tax year For employees with multiple jobs, total annual taxable wages for all lower paying jobs in the household “It looked a lot more like the 1040 than a W-4,” Isberg says. "
So say you have 2 equal wage earners who each fill out this form for their employer. Won’t they be taking double deductions from both? Both will deduct for interest and dividend income, and they will deduct for all wages twice. This is seems like this would be even more of a clusterf#$& than it is currently.
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dannylion
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Post by dannylion on Apr 9, 2019 13:10:37 GMT -5
I didn't see that there will be any penalty if the information is not accurate. If the option to designate that a specific amount be withheld is still available, just fill in the boxes with zeroes and specify the amount to be withheld. Employers don't need that much personal financial information.
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chapeau
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Post by chapeau on Apr 9, 2019 13:41:23 GMT -5
I didn't see that there will be any penalty if the information is not accurate. If the option to designate that a specific amount be withheld is still available, just fill in the boxes with zeroes and specify the amount to be withheld. Employers don't need that much personal financial information. That may just be what I’d do. Although I already have to submit ethics paperwork to the state that details who I get money or gifts from (above a certain amount) and who I owe (again, above a certain amount). This goes to a specific state office, though, not HR or payroll. Given how much HR and payroll people at my previous employer gossiped, I’d almost definitely lie. Or maybe I’d list DH’s info and he could list mine...
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souldoubt
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Post by souldoubt on Apr 9, 2019 14:26:42 GMT -5
New tax laws went into effect 1/1/18, some people ended up owing more than the prior year when they went to file so the solution is to change the current form and make people include more information? Seems like it would be a lot easier just to tell people to adjust their with holdings which is what used to happen. Information overload isn't the answer especially when quite a few people don't even realize they paid less in 2019 than 2018 but simply got more of it back from each paycheck.
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NoNamePerson
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Post by NoNamePerson on Apr 9, 2019 14:44:44 GMT -5
WOW, I can see it now. Folks having to call their accountant or CPA begging for help filling out their W-4 forms not to mention State withholding forms (in states that have withholdings). Dang, there may be a cottage industry in there for some retired pEEps - off the books of course
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Lizard Queen
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Post by Lizard Queen on Apr 9, 2019 15:16:58 GMT -5
New tax laws went into effect 1/1/18, some people ended up owing more than the prior year when they went to file so the solution is to change the current form and make people include more information? Seems like it would be a lot easier just to tell people to adjust their with holdings which is what used to happen. Information overload isn't the answer especially when quite a few people don't even realize they paid less in 2019 than 2018 but simply got more of it back from each paycheck. I agree. The calculator told me I should claim 8. Wtf? I was going to claim 2, but my DH was nervous about underwithholding, so I changed it to 1. Perhaps they could simply fix the stupid thing that came up with 8 for me. The proposed way would be even more complicated.
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phil5185
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Post by phil5185 on Apr 9, 2019 15:30:44 GMT -5
Currently, the average US IRS filer gets a $3000 refund. There are 229 million returns each year. Ie, the IRS has to send us 687 billion dollars each Spring. The US Annual Budget is in the $2.5T range - so the IRS has to send out over 1/4 of its money in refunds. That's a HUGE amount of money that is needlessly moving around in our country - check, US Mail, electronic transfers - lots of opportunity for fraud. That has always seemed really dumb to me - I do my part to squelch it, I never get a refund, I always owe in April. There are a couple of advantages - ie, I have the use of that money all year, it stays invested (at 11%/yr) until April. And (2) the "no refund" plan defeats the scam where some scamp fraudulently files your return early and steals your refund. As for the convoluted W4 that is proposed - remember, it is an estimate. You can't know these items at the beginning of the year, you can only provide estimates.
Nonwage income, such as interest and dividends?
Itemized and other deductions? Income tax credits expected for the tax year?
For employees with multiple jobs, total annual taxable wages for all lower paying jobs in the household?
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NoNamePerson
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Post by NoNamePerson on Apr 9, 2019 15:36:09 GMT -5
Currently, the average US IRS filer gets a $3000 refund. There are 229 million returns each year. Ie, the IRS has to send us 687 billion dollars each Spring. The US Annual Budget is in the $2.5T range - so the IRS has to send out over 1/4 of its money in refunds. That's a HUGE amount of money that is needlessly moving around in our country - check, US Mail, electronic transfers - lots of opportunity for fraud. That has always seemed really dumb to me - I do my part to squelch it, I never get a refund, I always owe in April. There are a couple of advantages - ie, I have the use of that money all year, it stays invested (at 11%/yr) until April. And (2) the "no refund" plan defeats the scam where some scamp fraudulently files your return early and steals your refund. As for the convoluted W4 that is proposed - remember, it is an estimate. You can't know these items at the beginning of the year, you can only provide estimates.
Nonwage income, such as interest and dividends?
Itemized and other deductions? Income tax credits expected for the tax year?
For employees with multiple jobs, total annual taxable wages for all lower paying jobs in the household?
Sounds more like a SWAG - sophisticated wild ass guess.
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phil5185
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Post by phil5185 on Apr 9, 2019 15:51:25 GMT -5
SWAG A fine old engineering term - and appropriate. lol.
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jeffreymo
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Post by jeffreymo on Apr 9, 2019 15:56:36 GMT -5
I don’t like the idea of listing those additional items, but fortunately my company has an electronic form that doesn’t require any handling by payroll. Only 3-4 people in our company of 35,000 even have access to the data and it’s not something that gets reviewed.
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Deleted
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Post by Deleted on Apr 9, 2019 16:00:24 GMT -5
New tax laws went into effect 1/1/18, some people ended up owing more than the prior year when they went to file so the solution is to change the current form and make people include more information? Seems like it would be a lot easier just to tell people to adjust their with holdings which is what used to happen. Information overload isn't the answer especially when quite a few people don't even realize they paid less in 2019 than 2018 but simply got more of it back from each paycheck. I agree. The calculator told me I should claim 8. Wtf? I was going to claim 2, but my DH was nervous about underwithholding, so I changed it to 1. Perhaps they could simply fix the stupid thing that came up with 8 for me. The proposed way would be even more complicated. Was 8 wrong? I've found the calculator to be pretty accurate.
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NoNamePerson
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Post by NoNamePerson on Apr 9, 2019 16:04:47 GMT -5
SWAG A fine old engineering term - and appropriate. lol. We also used it in Real Estate - people would ask "what is my house worth" and I would reply that I could give them a SWAG appraisal.
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Lizard Queen
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Post by Lizard Queen on Apr 9, 2019 16:45:23 GMT -5
I agree. The calculator told me I should claim 8. Wtf? I was going to claim 2, but my DH was nervous about underwithholding, so I changed it to 1. Perhaps they could simply fix the stupid thing that came up with 8 for me. The proposed way would be even more complicated. Was 8 wrong? I've found the calculator to be pretty accurate. I'm guessing it is. I've never been anywhere near that before.
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Deleted
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Post by Deleted on Apr 9, 2019 17:11:11 GMT -5
I'm somewhat curious about it, but that's because I am going to have to do some of that sophisticated wild ass guessing next year. It will be my first full year of retirement.
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thyme4change
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Post by thyme4change on Apr 9, 2019 17:41:43 GMT -5
If you dont want to tell your employer about your extra jobs, you can either add an amount, or have your other job withhold at a very high rate. I dont know how much your side hustles are earning, but worst case scenario, you are under withheld and will owe some money in April.
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chapeau
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Post by chapeau on Apr 9, 2019 17:52:07 GMT -5
If you dont want to tell your employer about your extra jobs, you can either add an amount, or have your other job withhold at a very high rate. I dont know how much your side hustles are earning, but worst case scenario, you are under withheld and will owe some money in April. As we do this year. I’m okay with owing a bit.
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Deleted
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Post by Deleted on Apr 9, 2019 18:31:43 GMT -5
In some ways it makes sense- back when I lived in NJ I was a single mother with very high property taxes and mortgage interest. I had to convert my deductions into "exemptions" and was withholding for 10 exemptions and still got a refund even though I had only DS.
I would NOT like supplying that level of detail to my employer even though, in my case, there were no additional jobs involved. My property taxes and mortgage interest are none of their business.
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