A national survey found that 4.6 million fewer taxpayers will receive a federal refund this year while 31 percent of Americans said their biggest Tax Day fear is making a math mistake on their taxes.
Now, there’s another complication coming out later this year: The IRS is changing how you adjust your paycheck withholdings, and early indicators show it won’t be easy.
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.
According to USA Today, the agency’s goal: A taxpayer shouldn’t owe or be owed come tax time.
But the changes won’t be simple, said Pete Isberg, head of government affairs at ADP, the payroll and human resources company.
Filling out the new form will be a lot like doing your taxes again.
“It’ll be a much bigger pain,” Isberg told USA Today. “The accuracy will be 100 percent, but the ease-of-use will be zero.”
While the new form hasn’t been released yet, the IRS last summer put out a draft version and instructions seeking feedback from tax preparation companies and payroll firms.
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 [the new form] looked a lot more like the 1040 than a W-4,” Isberg told USA Today.
The new form referenced up to 12 other IRS publications to fill it out.
It was reportedly so complex and different from the previous W-4 form that Ernst & Young worried employees would struggle to fill it out correctly and employers may need to offer training beforehand.
An updated draft version of the new W-4 is expected by May 31, according to the IRS, which will also ask for public comment, agency spokeswoman Anny Pachner told MSN Money.
Once the new form is ready, taxpayers will need their past 1099 forms, pay stubs and the previous year’s tax return. The IRS said they’ll need their filing status, number of dependents, information about itemized deductions like home mortgage interest, state and local taxes, and charitable deductions.
Taxpayers also will need earnings from all jobs and information about non-wage income like business income, interest and dividends.
Also, if married and both spouses are employed, taxpayers will need to present their spouse’s income.
“We encourage taxpayers to take advantage of the [public comment] opportunity and send us comments on the design,” Pachner said.