24
Seeing 20/20
in 2020
The Tax Cuts and Jobs Act (TCJA) went into effect in 2018
so most taxpayers are well aware of the impact that had on their 2018
income tax returns. For the most part the same rules applied to the
2018 tax returns will also apply for the 2019 returns. If you realized
that not enough tax was paid throughout the year you may have been
left wondering what changes you should make so that doesn’t happen
again. While it is too late to make any changes for 2019, you can make
some changes for 2020 and stop the cycle of owing the IRS and State.
Starting in 2020, the IRS has a new Employee’s Withholding
Certificate (Form W-4). This is the form that employees complete
and provide to their employer that lets the employer know certain
information about the employee such as whether the employee is
single or married or head of household. All of this information given
on the Form W-4 helps the employer know how much tax to withhold
from the employee’s paycheck. The form is simpler than it used to be
in that it is no longer necessary to figure out how many dependents
or withholding exemptions, you intend to claim. Some taxpayers in
the past have indicated they are married but want the employer to
withhold tax at the single tax rates. That has disappeared from the
new form and now if you would like additional tax withheld one option
is to mark a box indicating that you have multiple jobs or that you have
a spouse who works. This will cause additional taxes to be taken out of
your regular paychecks so that you may avoid owing taxes at year end.
For the 2018 tax returns after the TCJA went into effect,
many taxpayers claimed they were receiving less in refunds or they
had to pay for 2018 when in prior years they received refunds. Recent
statistics from the IRS based upon tax returns filed during tax season
2019 indicate that the prior year average refund of $2,778 decreased by
only $49 for 2018 returns filed. The concerns over the tax act changes
By Robbin Brophy, EA
A
F R
E S H
L O O K
AT OUR
FINANCES
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IS BENEFICIAL
AND CAN BE AN
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E Y E O P E N I N G
E X P E R I E N C E