IRS overhauls federal income withholding forms

Tax forms can seem daunting and confusing, so in an effort to simplify the process, the IRS has overhauled the federal income withholding form.

Here's what you need to know about the new W-4s.

For the first time in years, the IRS updated the federal income withholding form or W-4. The change reflects the new tax code congress approved in 2017.

The new form has been divided into five steps and you can skip questions that don't apply to your situation.

One major change is that it took away allowances, because the new tax law eliminated personal exemptions.

Instead, the form directly asks you how many children and dependents you have and you have to multiply that number by the amount of the federal tax credit.

It also simplified the section about other income.

Now you just have to check a box if you work two jobs or if you have a spouse who works.

You only need to fill out a W-4 if you started a new job in 2020, but tax specialists encourage workers to review their withholding each year.

If too little is deducted, you may get a smaller refund, or possibly owe money at tax time.

If too much is deducted, you might get a fat check at tax time, but you're basically giving the government a no-interest loan throughout the year.

Also new this year, this IRS Free File program has expanded with even more companies helping people electronically prepare their taxes.

There are currently 10 software options to pick from. Just be sure to check out the eligibility requirements online.