Broker Check
New Form W-4 for 2020

New Form W-4 for 2020

January 09, 2020

To Clients and Friends of Financial Pathways:

I am so happy to be making my first post to the Financial Pathways blog. To get the ball rolling, I’d like to share a recent experience I had during my first week at the firm.

Over the past year, many taxpayers found out they under-withheld from their paychecks (due to recent changes in tax law) and owed a lot of money after filing their tax return. That's where the new Form W-4 comes into play, intended to be used in tandem with the IRS' Tax Withholding Estimator.

Here is the problem. What do you do when a task that was always simple, isn’t so simple anymore? Well, that is exactly what I asked myself after trying to fill out the form for 2020. While the new form attempts to find a more precise estimate of your tax liability, I struggled with the same form that used to take all of 45 seconds to complete. The funny part is the IRS actually believes the changes “reduce complexity and increase the transparency and accuracy of the withholding system.” Go figure!

Filling out your W-4 is an important step, after all. Withhold too little, and you may be hit with a large tax bill and penalties. Withhold too much, and you essentially give Uncle Sam an interest-free loan. What’s a guy to do? The trick is to get as close as you can to breaking even. This means finding a happy medium where both you and Uncle Sam are happy.

The whole experience made me wonder how others will handle their withholding as they kickoff the new year with a new employer. Isn't starting a new job supposed to be a pleasant experience? Well, a few hours after my ordeal, we received our first email from a client who was also having difficulty completing the form—only now I was prepared to explain the process I had just mastered—with some help from the estimator!

If you are having trouble with the updated Form W-4 (or any other financial question, of course), feel free to reach out to Financial Pathways for help. There is also a great article at that provides an overview of the process. Here’s to getting the refund you expect!