New, ‘Easier’ W-4 for Withholding Taxes in 2020

From Money – By JULIA GLUM January 7, 2020. 

You’re not the only one taking a “new year, new me” approach to 2020. Even the IRS is changing things up — it just debuted a new Form W-4.

Form W-4, the official name for the Employee’s Withholding Certificate, is a document workers fill out so their employers can determine how much federal income tax to deduct from their paychecks. It’s widely used, and it’s long needed an overhaul. This redesign, necessitated by the 2017 Tax Cuts and Jobs Act, is the first big update Form W-4 has gotten in roughly three decades, according to the New York Times.

The IRS says the makeover “reduces the form’s complexity and increases the transparency and accuracy of the withholding system.” Rather than forcing taxpayers to fill out “complicated worksheets,” they’ll answer “more straightforward questions.”

But what does that mean for you and your taxes? Well, if you do the new Form W-4 voluntarily and get a more precise withholding number, your tax refund will be lower… and that’s actually good thing.

Here’s a brief guide to everything you need to know about the new Form W-4.

What’s Different in the New W-4?

One major shift is that Form W-4 doesn’t use allowances any more.

Previously, the value of an employee’s allowances was tied to their personal exemptions, or the amount of money each taxpayer could automatically deduct for themselves and their dependents. (For 2017, it was $4,050.)

But personal exemptions were eliminated in the Tax Cuts and Jobs Act. The standard deduction and child tax credit went up instead, according to the Tax Policy Center.

The new Form W-4 calculates withholding by having you complete five steps. Step 1 is just your personal information like your name and Social Security number, and Step 2 is about multiple jobs and spouse work if you have them. Step 3 is for dependents; Step 4 is for other adjustments. Finally, Step 5 is your signature. Not all the steps are required for everyone.

Who Needs to Fill Out a New W-4?

People who start new jobs in 2020 are required to complete the new form. If you’re with the same employer as in 2019 or before, though, then they’ll just keep doing what they’re doing — determining your withholding based on your most recent Form W-4.

However, it’s not a bad idea to do a “payment checkup,” as suggested by the American Payroll Association. The IRS also recommends you check your withholding whenever you have a big lifestyle change, like if you get married, become divorced or have a baby.

If you do end up wanting to make changes, you’ll need to use the upgraded version of Form W-4.

What Happens If I Screw It Up?

If you don’t withhold enough, you may have to pay a tax bill or face penalties. If you withhold too much, you’re basically letting the government have an interest-free loan.

The IRS says people should increase their withholding if they have more than one job at once, if their spouse also works or if they have extra income from certain sources. Typically, people should decrease their withholding if they qualify for income tax credits or could take certain deductions, like for student loan interest.

Luckily, the IRS has a handy tax withholding estimator online to walk you through everything. But beware: To make sure your results are as accurate as possible, you’ll likely want to have your pay stubs, last year’s tax return and documents from your spouse (if applicable) on hand. As such, using the tool is not necessarily a quick process.

That said, the estimator is intended to help you fill out the Form W-4, so if you’re worried about privacy or confused in general, it may be worth the time.

Here’s a link to the IRS FAQs on the 2020 Form W-4:

https://www.irs.gov/newsroom/faqs-on-the-2020-form-w-4

5 FINANCIAL STEPS TO TAKE NOW

By Successful Farming Staff – 9/3/2019. 

  1. Write a summary of what happened on your farm this growing season. This helps you think through decisions.
  2. Update your operating budget. Compare what you planned to spend for seed, fertilizer, crop protections, etc., and what you actually paid. Make per-acre adjustments based on actual acreage. Update yield projections. Reassess your break-even price per bushel.
  3. With an adjusted breakeven, review and update your marketing plans. Have you locked in higher prices? Do you need to sell less or more?
  4. Update your financial projections. In addition to cash flow and income statement, update balance sheet projections.
  5. Use the updated information to have constructive conversations with trusted advisers like Dangerfield Consulting.
Photo from Rodale

The Elusive Goal of No-Till Organic

From modern farmer by Brian Barth. 

Giving up the plow is one of the best things a farmer can do for the planet. So why aren’t more organic growers taking the plunge?

Tilling is as synonymous with farming and gardening as compost and muddy boots. It’s used to eliminate weeds and break up hard soil so that tender seedlings may grow. So, it may come as a surprise that growers are abandoning the plow in droves.

About one in five agricultural acres in America is now maintained without annual tillage. The reasons are many, and some are purely financial. Plowing from fenceline to fenceline costs farmers time and money, and heavily tilled soil often requires more fertilizer. Environmentalists like the idea of less tractor fuel and fertilizer use, and they also recognize that tilling destroys natural soil structure and makes farmland more susceptible to erosion. It is the primary culprit behind the loss of topsoil, which has become a global crisis. Tilling also releases soil-bound carbon compounds into the atmosphere, helping to make agriculture a major contributor to global warming.

Given these facts, one would think organic farmers would be first in line to give up their plows. But it’s not so.

The reason, explains Jeff Moyer, executive director of the Rodale Institute, is that organic farmers are reliant on tillage to control weeds, while conventional producers have the option of using herbicides (the advent of herbicide-tolerant GMO crops has allowed no-till to be adopted on a large scale). Moyer has worked at Rodale, a research center in Pennsylvania, since the organic farming movement was still in its infancy and he says it is essential that chemical-free agriculture lose its tillage habit if it is going to scale up to feed the world. “When I began working in organic agriculture in the seventies, much of our research on weed management focused on tillage,” he says, even though “we understood as soil scientists that tillage is not necessarily a good thing.” Used sparingly, tillage is a fairly benign tool, he adds, but “overtilling, which many organic farmers are trapped in, is unwise—if you’re an earthworm, tillage day is not a good day.”

In the 1990s, Moyer and his colleagues at Rodale began working on a solution to the no-till organic conundrum. Organic farmers have long grown off-season “cover crops”—species that help replenish the soil without fertilizers. Traditionally, these would be cut and then tilled into the earth in preparation for planting. But Moyer wondered if there was a way to use the cover crop residue as a weed-suppressing mulch, just as gardeners often spread straw around their crops to keep weeds from germinating. In order to do so, he invented a tractor implement called a roller-crimper, which flattens the stalks onto the ground and roughs up the stems so they don’t resprout.

After flattening the cover crop, it’s possible for organic farmers to employ the specialized no-till planting equipment used by conventional growers to place seeds and transplants into the decaying crop residue. As that residue decomposes, it enhances soil structure, keeping the earth loose and fertile—and making tillage even less necessary.
“Everybody said it was impossible to grow crops organically without using tillage,” says Moyer.

He proved the world wrong, but even though it’s possible, it’s still not easy. The next steps for making organic no-till methods more widely adopted, he says, are advancements in the art and science of cover crops. No-till organic methods don’t work perfectly in every region with every crop—the variety of cover crop and how it is managed have to be perfectly tuned to the context. Right now, there are only a few types of cover crops in widespread use, and many farmers lack the experience in how to use them in a no-till system. This is slowly changing, says Moyer.

In the interim, he’s working to help the organic farmers who do employ no-till methods to gain greater recognition for their efforts and, perhaps, a price premium for their products. Rodale has recently completed the pilot stage for Regenerative Organic Certified, a new label that he hopes will be found on grocery store shelves soon. “We’re hoping that the first farms will get through the certification process by the end of next summer,” says Moyer.