Recently, the W4 form received an overhaul. The form that you fill out with your employer when you start working, this document determines the rate you will have federal income taxes withheld from your pay - and now, it looks very different from the W4 that we all used for years.
We asked Healthcare Tax Expert, Andrew D. Schwartz, CPA to share some insight on the new W-4 form for travel clinicians everywhere. Schwartz is a frequent speaker at New England conferences, universities, and community events. He is the author of many tax and financial articles and is frequently interviewed in national media,
such as the ABC News, Washington Post and Wall Street Journal, and local media, such as Greater Boston Radio 92.9 and Boston.com.
"After decades of misleading all but the most straightforward of taxpayers, the W4 form has been replaced with a new W4 form." Andrew says.
"The problem with the prior version of the W4 form was two-fold. First, the withholding tables assume that you only have one job. So anyone who works for multiple employers can have a tough time having sufficient taxes withheld. Work for three employers and earn $20k from each employer, and you’ll have significantly less in taxes withheld than if you work for one employer and earn the same $60k."
Moreover, if you’re married, Andrew says, then the withholding tables assume that your spouse doesn’t work.
"With the old form, it wasn't uncommon for a married couple to owe many thousands of dollars in federal income taxes when both spouses work and both also claim “married” with a few allowances on their respective W4s." he says.
The New Form
According to Andrew, with the new W-4 forms, these issues have issues have all been addressed. Check out the new W4 form and you’ll see there is a new section called Step 2 that specifically addresses the withholding for people who work for multiple employers, and/or for married couples when both spouses work.
Will this new W4 form do the trick? Only time will tell!