Articles Posted in Tax Filing

Almost anyone who has started a new job in the U.S. has filled out Form W-4, which tells employers how much money to withhold from paychecks for federal income tax. At the end of 2019, the IRS made significant changes to the form. While the revised form calls for more information from employees, it presents it in a way that may prove easier to understand and fill out. Here is what employees and employers should know about the new Form W-4.

What Is Form W-4?

“Withholding” generally refers to amounts deducted from employees’ gross wages for federal income tax. The amount of tax an employee will owe depends on multiple factors, including whether the employee will file singly or jointly, the number — if any — of dependents they have, and the amount of deductions they anticipate having. Employees use Form W-4 to notify the employer how much withholding to take from their paychecks.

What Is Different About the New W-4 Design?

If one were to compare the layout of the 2020 W-4 to the 2019 form, the first difference they might notice is the simpler layout of the new form. Instead of instructions packed tightly onto the first page in a tiny font, the new form begins with the fields that employees must complete. The instructions begin on the second page.

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As local and state governments continue to implement protective measures against the global coronavirus pandemic, businesses have had to adapt quickly. Many businesses have had to close indefinitely because of “shelter in place” orders that urge people to remain home except for essential functions. The IRS has extended the deadline for paying income taxes and filing returns. Other federal agencies have taken similar actions. A de facto ban on social gatherings in many parts of the country has almost certainly had an impact on businesses that sell alcohol, along with other businesses regulated by the Alcohol and Tobacco Tax and Trade Bureau (TTB). In late March 2020, this agency announced postponement of multiple filing and tax deadlines.

The Alcohol and Tobacco Tax and Trade Bureau

Like the IRS, the TTB is part of the U.S. Department of the Treasury. It was created when the Homeland Security Act of 2002 moved the law enforcement functions of the Bureau of Alcohol, Tobacco and Firearms (ATF) to the Department of Justice. The Treasury Department retained ATF’s regulatory and tax collection roles and transferred them to the newly created TTB. It has authority over the federal taxation of alcohol, tobacco, and firearms.

National Emergency

The Internal Revenue Code (IRC) gives the Secretary of the Treasury the authority to postpone payment and filing deadlines in the event of a “federally declared disaster.” The president made an emergency declaration on March 13, 2020.

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The world has had to learn a new vocabulary in recent weeks. In an effort to slow the spread of the coronavirus and the disease it causes, COVID-19, public health officials across the globe have urged people to practice “social distancing.” Non-essential businesses are closed, and thousands if not millions of people have quickly learned how to work remotely. In the midst of all of this, the federal government has offered some relief by delaying Tax Day for three months. Instead of income tax returns and payments being due on April 15, they will now be due on July 15.

Why April 15?

April 15 has been the due date for federal income taxes for a little less than seventy years. Income taxes themselves have only been an inevitable part of life nationwide for a bit more than a century.

The Sixteenth Amendment to the U.S. Constitution first authorized the federal government to levy an income tax in 1913. Eight years earlier, the Supreme Court had ruled that an income tax contained in a tariff bill was unconstitutional. Amending the Constitution overruled the court.
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