2020 W4 Step 3-> Number of dependents

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Topic Author
KlangFool
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2020 W4 Step 3-> Number of dependents

Post by KlangFool » Wed Jan 01, 2020 2:10 pm

Hi,

I am trying to fill the number of dependents for the new 2020 W4. I am married filed jointly with one kid as a dependent. So, in this case, do I fill in the number of other dependents as 2 or 3?

Thanks in advance.

KlangFool

tenkuky
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Re: 2020 W4 Step 3-> Number of dependents

Post by tenkuky » Wed Jan 01, 2020 2:20 pm

Happy New Year, Klang!
From what I gather from the instructions: Step 3 is mainly to calculate child tax credit and credit for other dependents. The language reads "older child or qualifying relative" as the former applies to children 17 and under.
So in your case, I would say that part is a 1 (not 2 or 3).
I am glad to be found wrong as I am no expert, just what I understand from the specific instructions.

Topic Author
KlangFool
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Joined: Sat Oct 11, 2008 12:35 pm

Re: 2020 W4 Step 3-> Number of dependents

Post by KlangFool » Wed Jan 01, 2020 2:25 pm

tenkuky wrote:
Wed Jan 01, 2020 2:20 pm
Happy New Year, Klang!
From what I gather from the instructions: Step 3 is mainly to calculate child tax credit and credit for other dependents. The language reads "older child or qualifying relative" as the former applies to children 17 and under.
So in your case, I would say that part is a 1 (not 2 or 3).
I am glad to be found wrong as I am no expert, just what I understand from the specific instructions.
Okay. I guess that I too literal in my interpretation. Thanks.

KlangFool

bhsince87
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Re: 2020 W4 Step 3-> Number of dependents

Post by bhsince87 » Wed Jan 01, 2020 5:03 pm

The way I interpret it, you would only enter the number of dependent children under age 17.

So if your child is under 17, then the answer would be 1.

I also think you can skip that step entirely, but then your taxes could be overwithheld.
"If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace." Samuel Adams

Topic Author
KlangFool
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Re: 2020 W4 Step 3-> Number of dependents

Post by KlangFool » Wed Jan 01, 2020 5:15 pm

bhsince87 wrote:
Wed Jan 01, 2020 5:03 pm
The way I interpret it, you would only enter the number of dependent children under age 17.

So if your child is under 17, then the answer would be 1.

I also think you can skip that step entirely, but then your taxes could be overwithheld.
bhsince87,

I am looking for the answer to the next question:

"Multiply the number of other dependents by $500"

KlangFool

kaneohe
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Re: 2020 W4 Step 3-> Number of dependents

Post by kaneohe » Wed Jan 01, 2020 11:18 pm

Do you have other dependents besides your son? If not, then why not 0 for other dependents? Where is the 2 or 3 coming from?

Topic Author
KlangFool
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Re: 2020 W4 Step 3-> Number of dependents

Post by KlangFool » Wed Jan 01, 2020 11:21 pm

kaneohe wrote:
Wed Jan 01, 2020 11:18 pm
Do you have other dependents besides your son? If not, then why not 0 for other dependents? Where is the 2 or 3 coming from?
Kaneohe,

I am not sure whether I need to add my wife as a dependent for this question.

KlangFool

kaneohe
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Re: 2020 W4 Step 3-> Number of dependents

Post by kaneohe » Wed Jan 01, 2020 11:29 pm

KlangFool wrote:
Wed Jan 01, 2020 11:21 pm
kaneohe wrote:
Wed Jan 01, 2020 11:18 pm
Do you have other dependents besides your son? If not, then why not 0 for other dependents? Where is the 2 or 3 coming from?
Kaneohe,

I am not sure whether I need to add my wife as a dependent for this question.

KlangFool
If you are filing MFJ, then your wife is not a dependent since she is part of the joint. I think that step is asking for
2K type dependents like younger kids, and the other dependents are 0.5K type dependents like older kids or qualifying relatives.

Topic Author
KlangFool
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Re: 2020 W4 Step 3-> Number of dependents

Post by KlangFool » Wed Jan 01, 2020 11:31 pm

kaneohe wrote:
Wed Jan 01, 2020 11:29 pm
KlangFool wrote:
Wed Jan 01, 2020 11:21 pm
kaneohe wrote:
Wed Jan 01, 2020 11:18 pm
Do you have other dependents besides your son? If not, then why not 0 for other dependents? Where is the 2 or 3 coming from?
Kaneohe,

I am not sure whether I need to add my wife as a dependent for this question.

KlangFool
If you are filing MFJ, then your wife is not a dependent since she is part of the joint. I think that step is asking for
2K type dependents like younger kids, and the other dependents are 0.5K type dependents like older kids or qualifying relatives.
That was my confusion. Thanks for the clarification.

KlangFool

kaneohe
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Re: 2020 W4 Step 3-> Number of dependents

Post by kaneohe » Wed Jan 01, 2020 11:38 pm

from p. G4 of pub 4012: sorry , won't allow me to copy/paste the text just the link: but that page says you can't claim the $500 credit for yourself or spouse.

"https://www.irs.gov/pub/irs-pdf/p4012.pdf"

"There is a $500 credit for other dependents who do not qualify for the $2,000 child tax credit. The dependent must be a
U.S citizen, U.S. national, or resident of the U.S. The dependent must have a valid identification number (ATIN, ITIN, or
SSN).
The $500 nonrefundable credit is available for dependents who don’t qualify for the child tax credit, such as children who
are age 17 and above, dependents with other relationships (such as elderly parents), or children who do not have a valid
SSN. Taxpayers cannot claim the credit for themselves (or a spouse if Married Filing Jointly)."

Topic Author
KlangFool
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Re: 2020 W4 Step 3-> Number of dependents

Post by KlangFool » Wed Jan 01, 2020 11:48 pm

kaneohe wrote:
Wed Jan 01, 2020 11:38 pm
from p. G4 of pub 4012: sorry , won't allow me to copy/paste the text just the link: but that page says you can't claim the $500 credit for yourself or spouse.

"https://www.irs.gov/pub/irs-pdf/p4012.pdf"

"There is a $500 credit for other dependents who do not qualify for the $2,000 child tax credit. The dependent must be a
U.S citizen, U.S. national, or resident of the U.S. The dependent must have a valid identification number (ATIN, ITIN, or
SSN).
The $500 nonrefundable credit is available for dependents who don’t qualify for the child tax credit, such as children who
are age 17 and above, dependents with other relationships (such as elderly parents), or children who do not have a valid
SSN. Taxpayers cannot claim the credit for themselves (or a spouse if Married Filing Jointly)."
Thanks for the information.

KlangFool

kaneohe
Posts: 6461
Joined: Mon Sep 22, 2008 12:38 pm

Re: 2020 W4 Step 3-> Number of dependents

Post by kaneohe » Thu Jan 02, 2020 9:48 am

At 3AM this morning, I got an aha! moment when I might have understood why you were asking the question.......in the old days, there
were deductions (standard or itemized) .In addition there were exemptions for you/spouse/dependents (3 in your case). Exemptions were basically an additional deduction. In addition there was a credit for each child .

With the new tax law the exemptions were eliminated. To compensate the standard deduction was increased. Also the child tax credit was increased and the "other dependent" credit was introduced.

However the basic definition of dependent was not changed.........that is your spouse is not your dependent. Possibly you are mixing the concept of the old exemption (multiply by 3 in your case) with dependents. It is a bit confusing.

Topic Author
KlangFool
Posts: 16566
Joined: Sat Oct 11, 2008 12:35 pm

Re: 2020 W4 Step 3-> Number of dependents

Post by KlangFool » Thu Jan 02, 2020 9:53 am

kaneohe wrote:
Thu Jan 02, 2020 9:48 am
At 3AM this morning, I got an aha! moment when I might have understood why you were asking the question.......in the old days, there
were deductions (standard or itemized) .In addition there were exemptions for you/spouse/dependents (3 in your case). Exemptions were basically an additional deduction. In addition there was a credit for each child .

With the new tax law the exemptions were eliminated. To compensate the standard deduction was increased. Also the child tax credit was increased and the "other dependent" credit was introduced.

However the basic definition of dependent was not changed.........that is your spouse is not your dependent. Possibly you are mixing the concept of the old exemption (multiply by 3 in your case) with dependents. It is a bit confusing.
Thanks. Now, let's hope the state form is updated.

KlangFool

nolesrule
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Joined: Thu Feb 26, 2015 10:59 am

Re: 2020 W4 Step 3-> Number of dependents

Post by nolesrule » Thu Jan 02, 2020 10:26 am

I had to read Pub 15-T to figure out exactly what was going on. I'm going to have to fill out a W-4 next month when I start a new job and needed to figure out how withholding will be calculated. They made it a bit more complicated by eliminating the paycycle tables in favor of multiplying income by pay periods, calculating tax and then dividing by pay periods. Saves paper but it's annoying.

Sahara
Posts: 120
Joined: Tue Dec 04, 2018 6:21 pm

Re: 2020 W4 Step 3-> Number of dependents

Post by Sahara » Thu Jan 02, 2020 6:42 pm

The IRS has an interesting webinar on understanding the new Form W-4.
https://www.irsvideos.gov/Webinars/Unde ... ithholding

charis23
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Re: 2020 W4 Step 3-> Number of dependents

Post by charis23 » Thu Jan 02, 2020 7:07 pm

I used the IRS' online tax withholding calculator here: https://apps.irs.gov/app/tax-withholding-estimator/

I have a relatively simple case: MFJ, 1 job, will itemize deductions in 2020. I'm confused why the estimator tells me to fill in a number >9,000 in Step 3 and not fill out Step 4b?

Sahara
Posts: 120
Joined: Tue Dec 04, 2018 6:21 pm

Re: 2020 W4 Step 3-> Number of dependents

Post by Sahara » Thu Jan 02, 2020 7:29 pm

Yes, I had the same question. You want to adjust (reduce) your withholding due to the tax credit that will be due to you. In order to do that, you inform your employer by completing Step 3 of the 2020 W-4. If I understand correctly, your employer then uses the worksheet in Pub 15 to determine the amount by which he/she has to adjust (reduce) your withholding. I suppose you could use the worksheet yourself, skip Step 3 and include the amount on line 4b.

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