New IRS Form Available for Public Comment

WASHINGTON — The Internal Revenue Service recently announced a draft of Form 8888, Direct Deposit of Refund, the new form for taxpayers who opt to split their refunds among accounts, is now available for public comment.

Tax professionals, taxpayers and other interested parties can make suggestions regarding the form and its instructions. The draft Form 8888 is posted on the IRS Web site under the tax professional section. Comments may be submitted electronically to the IRS by selecting Comments on Draft Forms and Publications.

Starting in January, taxpayers will have more choices and flexibility for direct deposits of their 2006 federal income tax refunds. They can split their refunds among up to three checking or savings accounts and three different U.S. financial institutions by using Form 8888. This new option will be available for tax returns filed either on paper or electronically.

Taxpayers can continue to use the direct deposit line on Form 1040 to electronically send their refunds to one checking or savings account.

This change will give taxpayers more options for managing their refunds, teamed with the speed and safety of direct deposit.

To view the new form or make comments, you should visit this link.

IRS Strengthens Withholding Program

The IRS has stepped up its withholding compliance program by making more effective use of information reported on W-2 wage statements to ensure that employees have enough federal income tax withheld from their paychecks. At the same time, employers are no longer required to submit potentially questionable Forms W-4 to the IRS.  In the past, employers had to send to the IRS any Form W-4 claiming more than 10 allowances or claiming complete exemption from withholding if $200 or more in weekly wages was expected.

Employees can use an easy-to-use calculator that can help you figure your Federal income tax withholding so your employer can withhold the correct amount from your pay. This is particularly helpful if you’ve had too much or too little withheld in the past, your situation has changed, or you are starting a new job.

You can visit the Connections page on my site, and click on Federal Withholding Calculator under TAX MATTERS.