Recent Tax Law Changes for Taxpayers Who Itemize
Legislation enacted on Dec. 20, 2019 affects some individual tax returns that taxpayers will file for 2020. This primarily affects taxpayers who claim:
- the itemized deduction for mortgage insurance, if they pay mortgage insurance premiums.
- the itemized deduction for medical and dental expenses.
The IRS will update the Tax Withholding Estimator to reflect these changes. Until then, if a taxpayer includes these expenses in the estimator and applies the estimator’s recommendation, their withholding may be slightly higher than needed. This means they would have a larger refund or owe less tax for 2020 than if they check and adjust their withholding after the update.
Taxpayers who plan to claim any of these deductions may want to check their withholding again after the IRS updates the Tax Withholding Estimator.
Before You Begin
Gather information for other sources of income you may have.
Have your most recent income tax return handy.
Use whole dollar amounts in the estimator.
The IRS encourages everyone to use the Tax Withholding Estimator to perform a “paycheck checkup.” This will help you make sure you have the right amount of tax withheld from your paycheck.
There are several reasons to check your withholding:
- Checking your withholding can help protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time next year.
- At the same time, you may prefer to have less tax withheld up front, so you receive more in your paychecks and get a smaller refund at tax time.
If you changed your withholding for 2019, the IRS reminds you to be sure to recheck your withholding at the start of 2020. A mid-year withholding change in 2019 may have a different full-year impact in 2020. So, if you do not file a new Form W-4 for 2020, your withholding might be higher or lower than you intend.
Also, if you had a major life change, such as marriage, the birth of a child, adoption or bought a home.
If you have additional questions about your withholding, consult your employer or tax advisor.
Use your results from the Tax Withholding Estimator to help you complete a new Form W-4, Employee's Withholding Certificate, and submit the completed Form W-4 to your employer as soon as possible. Withholding takes place throughout the year, so it’s better to take this step as soon as possible.
Many employers have an automated system for submitting an employee's changes for Form W-4. Please be sure to check with your employer to see if they have this option available.
If you receive pension income, you can use the results from the estimator to complete a Form W-4P (PDF) and give it to your payer.
This Tax Withholding Estimator works for most taxpayers. People with more complex tax situations should use the instructions in Publication 505, Tax Withholding and Estimated Tax. This includes taxpayers who owe alternative minimum tax or certain other taxes, and people with long-term capital gains or qualified dividends.