We often get asked by clients and their employees, “When Should I File a New W-4?” At a minimum, we suggest reviewing your filing annually. Often, a large refund or tax bill is a good reminder to check your withholding. The IRS offers its own Tax Withholding Estimator that is very useful.
If you determine that you need to update your withholding, you will need to file a new form with your employer. See our discussion of the new 2020 W-4 form and instructions here.
The IRS also suggests that the following taxpayer circumstances might trigger a review of your withholding and potentially a new W-4:
- part of two-income families
- working two or more jobs or who only work for part of the year
- with children who claim credits such as the child tax credit
- with older dependents, including children age 17 or older
- who itemized deductions on their 2019 tax return
- with high incomes and more complex tax returns
- with large tax refunds or large tax bills for 2019
- who received unemployment at any time during the year
Taxpayers who complete a new Form W-4 should submit it to their employer as soon as possible. With withholding occurring throughout the year in every paycheck, it’s better to take this step sooner, rather than later.
If you have any other questions, please don’t hesitate to contact your JMF Client Accounting Services team member or your payroll specialist.