The federal government requires employees to provide employers with a form W-4 so that the employer can adjust the employee’s income tax withholding to better match employee’s circumstances using IRS-supplied formulas and tables. You may question the accuracy of the historical use of the form and associated withholding tables as most taxpayers were positioned for a refund which gave an interest-free loan to the federal government.
With the 2018 tax law changes personal exemptions are gone. Hence the basis that the old W-4 used to calculate withholding is no longer accurate.
In its place the federal government recently released a new W-4 format for 2019 that collects considerably more personal information to determine the employee’s tax withholding. Information such as spousal income, income from other jobs, income from interest and dividends and tax credits.
Employees have an option to use the IRS withholding calculator to estimate the amount of income tax that should be withheld from their pay. Some employees will be reluctant to share their income information not associated with the w-4 related job.
I urge the IRS to find an alternative to this proposed reporting. I also strongly suggest that employees work with their tax advisor to compute the appropriate level of withholding. Absent those options, use the IRS withholding calculator yourself and simply tell your employer what amount to withhold.