W-4 Now Twice as Long : IRS Unveils Complicated Tax-Withholding Form

WASHINGTON —  The Internal Revenue Service, apologizing for the complexity, on Tuesday unveiled a new tax-withholding form that every worker will have to file to reflect this year’s landmark tax overhaul legislation.

The new tax law, which initially was billed as simplification, turned a two-page W-4 withholding form and work sheet into four pages that includes a 22-column, 29-line table of figures.

“We know that this looks like it might be complicated,” Arthur Altman of the IRS said as the agency began a campaign to make Americans aware of the need to file a new W-4 form before next Oct. 1.

More Personalized

But the payoff, Altman added, is a more personalized form that will allow most workers to adjust withholding so that all their tax liability--no more and no less--is withheld during the year.

The tax overhaul law, most of which takes effect Jan. 1, cuts tax rates, repeals some popular deductions and reduces others. A worker whose tax withholding under present law is reduced because he or she takes some of those deductions is likely to be under-withheld in 1987 by the loss of the deductions.

A person who does not have enough tax withheld during the year has to send the IRS a check when filing a tax return in the following year. If the under-withholding is substantial, significant penalties can result.

Early Filing Recommended

Although the law requires only that a new W-4 be filed by Oct. 1, the IRS said most workers would be better off filing as soon as possible. Starting Jan. 1, taxes will be withheld on the basis of the old W-4 until a new one is filed.

To fill out the form, workers will have to estimate what adjustments (such as individual retirement account contributions), itemized deductions and tax credits they will have under the new law for 1987.

The IRS promised to have a supply of the new forms and instructions in the hands of employers within the next few weeks. It is up to employers to get the forms to workers.