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Public Comment Open to IRS on Draft Form W-4


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June 19, 2019

In May the IRS released a draft Form W-4, which is expected to go into effect in 2020.  The draft form has some major revisions to not only the layout, but the information collected.  The object of the new form is to increase the accuracy of income-tax withholdings for employees.

The changes to the form are in reaction to the Tax Cuts and Jobs Act, which took effect last year. The revised form eliminates the use of withholding allowances and replaces complicated worksheets with more straightforward questions.  To see the draft form as well as the sample instructions click here https://www.irs.gov/pub/irs-dft/fw4–dft.pdf.

The IRS has stated that employees who have submitted Form W-4 in any year before 2020 will not need to submit a new form because of the redesign.  However, if a current employee wishes to adjust their W-4 information after the new form has taken affect, they will need to complete the redesigned form.

The IRS is asking for the public comment on the form.  The comment period is open until July 1st and you can submit your comments directly to the IRS via email at  WI.W4.Comments@IRS.gov.

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June 6, 2019

Were you surprised with such a small refund, or worse yet you unexpectedly had to write a check on April 15th?  If the answer to this question is yes, and you have not yet adjusted your federal income tax withholding, the impact may be even greater for the 2019 tax year.  This is because the new withholding tables will be in effect for all twelve months, versus about nine months for 2018.

Last summer, we urged our clients to review their federal income tax withholding, shortly after the IRS released the new withholding tables.  We are reminding you again now of the importance of evaluating your withholding.

Taxpayers most likely to be negatively affected by the 2018 withholding tables included households with two wage earners, individuals with multiple employers, and taxpayers affected by the new rules on itemizing.  This current version of Form W-4, which is used to update your withholding amounts, is just not capable of accounting for all of the changes brought about by tax reform.

The IRS has been working on creating a new Form W-4 which will be more aligned with the changes brought about by tax reform.  A draft version is expected by the end of May, with a second draft planned for later this summer.  The final version will be released by the end of 2019 in time to use for the 2020 tax year.  You can expect the new Form W-4 to be significantly more complex than the current version.

The IRS does have a withholding calculator available on its website to assist you in completing Form W-4.  The calculator is available at www.irs.gov/payments/tax-withholding.  In order to use the calculator you will need to have your most recent pay stubs and be able to answer questions about your estimated 2019 income.

Alternatively, your tax professional at Ketel Thorstenson can perform the calculations for you.  You will need to provide us with your most recent paystubs and inform us of any family or tax changes that may affect your 2019 tax situation.  Now is the time to evaluate your federal withholding to avoid surprises next April.  Contact your KTLLP tax professional today at 605-346-5630 for assistance.

 

 

 

 



June 27, 20180

The recently enacted Tax Cuts and Jobs Act (TCJA) will result in lower 2018 tax bills for millions of Americans.  In response to the newly lowered tax rates, the IRS has revised the federal income tax withholding tables for 2018.  Thus, you may have noticed less federal income tax being withheld from your paycheck, retirement distributions, and/or social security benefits.

The new withholding tables are designed to give you more take home pay during the year, but by doing this, your anticipated tax refund may be totally eliminated.  We have recently learned that many taxpayers may even have a balance due when they file their 2018 tax return next April.  Taxpayers with multiple jobs may be more greatly impacted.  We are especially concerned about our clients who have become accustomed to receiving a tax refund every year.  We know our clients do not like these kinds of surprises and neither do we!

If you have federal income tax withholding, whether it be as a W-2 employee, or from retirement benefits such as IRA’s, pensions, and Social Security, we strongly encourage you to contact us so that we can evaluate your 2018 tax situation.  There is still time to make withholding adjustments for 2018, but we must act quickly as we are already halfway through the year.

In order to perform the necessary calculations, we will ask that you provide us with copies of your most recent paystubs showing year-to-date payments and withholdings.  We will also ask you about any changes to your family and/or tax filing status that may affect your tax situation.  We will use the information you provide to project your 2018 tax liability and will provide you with an estimate of the amount of tax that you will either owe to the IRS or be due a refund when filing your tax return.

If you do not like the outcome of the tax projections and would like to have additional federal income tax withheld, we can also assist you with completing a new W-4 to give to your employer, W-4P to give to your pension administrator, or W-4V to give to the Social Security Administration.  At Ketel Thorstenson, we are here to help you!  Please contact us today at 605-342-5630 to discuss your individual tax needs.


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March 22, 20170

The deadline to file your 2016 individual tax return is fast approaching.  If you have not filed your tax return, you may need to consider filing an extension prior to April 18, 2017.  An extension is a way to ask the Internal Revenue Service for an additional six months to prepare and file your tax return.  However, an extension of time to file is not an extension of time to pay. Any tax due for 2016 still needs to be remitted to the IRS by April 18, 2017. Payments of tax made after April 18th are subject to penalties and interest.   If you fail to file an extension and file your return after April 18, 2017, late filing penalties will apply if you owe tax.

Call the Ketel Thorstenson Tax Team with any questions, 605-342-5630.


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