Completing Tax Return

Determining your withholdings is important to get right, because you don’t want to owe the IRS at tax time. You don’t want to have too much withheld either.  An overpayment is a tax free loan to the government.  It is better to have the funds held in your savings account rather than overpaying IRS. The newly released IRS Form W-4 may require employees to spend more time to complete the form. While the form seems simpler than the previous version, it can take longer to complete. It removes the allowances you could claim for yourself for family members, but it requests more specific information in its place. This may cause some additional research, requiring you to seek last year’s tax return for information.

Complete a new W-4 if:

  • you started a new job
  • you experienced a major life event like getting married or having a child
  • you were disappointed with your 2019 tax outcome (i.e. you owed money to Uncle Sam or you had a large overpayment)
  • you have multiple jobs

No need to complete a new W-4 if:

  • if your work tax status hasn’t changed from last year

Married Couples Benefit

If you are married and you and your spouse both work, the new form should be easier to complete. The multi-step process to determine how much each person should withhold has been replaced. Now you check a box that says you both have jobs and the calculations are done for you.

Note, if you check the both spouses working box, only the highest-earning spouse should fill out Steps 3 and 4, which ask for dependents, additional income, deductions, and extra withholdings. If you both complete Step 3, too little will be withheld from your paycheck and you will owe. If you both complete Step 4, too much will be withheld and who wants the government to hold on to your money unnecessarily.

Regardless of whether you are married or not, take your time completing the W-4.Contact us if you have questions at 401-831-0200.

Tax Withholding Estimator

Step 2 of the new W-4 provides three options when you have more than one job or your spouse has a job.  Each option has tradeoffs between accuracy, privacy and ease of use.  For maximum accuracy and privacy, you should use the Tax Withholding Estimator.  If you don’t have access to the Tax Withholding Estimator, you can complete the Multiple Jobs Worksheet on page 3 to roughly determine accurate withholding and to retain privacy.

Impact on RI W-4

Starting in 2020, all Rhode Island employees must complete a new RI W-4.  Rhode Island is no longer using the federal W-4 in calculating the Rhode Island withholding.

Leave a Reply

Your email address will not be published. Required fields are marked *