TAP F04-014

Form W-4EZ

Statement of Issue:

Some taxpayers have difficulty accurately calculating withholding on Form W-4 due to its complexity.

Proposal:

The Committee recommended that a new W-4EZ form be created and designed a “mock” W-4EZ as an example.

However, based on research data, the Committee agreed that a single W-4EZ form would not work, because the situations are so different for single and married taxpayers, so recommended one new form for single (W-4EZ-S) and one for married (W-4EZ-M) individuals. The forms would be most accurate using the following criteria for taxpayers using these new forms:

1. Income of less than $50,000 per year
2. Having less than three children
3. Not itemizing deductions

Finally, the Committee encouraged the addition of instructions that explain that a taxpayer should not claim the exemptions on this W-4 if they have more than one job and this W-4 is not for the primary job. One of the situations that will cause taxpayers to be underwithheld is when they work at more than one job (or both the spouse and taxpayer claim the same exemptions). Because the new W-4EZ-S and W-4EZ-M would eliminate many of the complexities of the regular W-4 form, these additions to the instructions should not make the new form too difficult to understand.

The Committee encouraged the program owner to include the Committee in implementing this recommendation, if it is accepted.