Taxes and Compliance - Staying up to Date!

Starting, January 1st Your Payroll Tax Withholding Form is changing, also known as Form W-4:

As part of the  Tax Cuts and Jobs Act enacted in December 2017, the IRS is revising Form W-4.   On May 31, 2019, the IRS released an "early draft" of 2020 Form W-4, Employee's Withholding Allowance Certificate. The form includes MAJOR revisions, including new input elements for federal income tax withholding calculations, which may require significant reprogramming of payroll systems and ongoing employer support of two distinct withholding systems.


 Here are some questions that may come up from your employees:

Q. When will employers and employees have access to the new form?

A. The final IRS form W-4 will be available by late November 2019 for 2020

Q.  Do I need to complete a new W-4 for 2020

A.  After January 1, 2020, IF you wish to change the amount of taxes withheld from your payroll check, you must report your changes using the new 2020 Form W-4

Q.  Will the employee be required to complete the new W-4?

A. Employers may, but are not required to distribute the 2020 Form W-4 to existing employees.  Employers must furnish the 2020 Form W-4 to newly hired employees after 2019

Q. Is it OK if someone chooses not to fill out a Form W-4 or if the employee does not return the form?

A. Employers must accurately apply input from Forms W-4 and calculate withholding per the new formulas and instructions. Employers may be held liable for amounts that should have been withheld but were not.

Q. What if I have questions on the W-4 and if my employees need to complete it?

A.  The IRS provides an excellent FAQ for employees and employers about the new Form W-4 for 2020.  https://www.irs.gov/newsroom/faqs-on-the-draft-2020-form-w-4

Q. What are the changes to the original form?

A. New marital status box for the head of household,

  • Checkbox for optional higher withholding,

  • Full-year value of a child, dependent, and other tax credits,

  • Full-year amount of different (non-wage) income,

  • Full-year amount of itemized deductions (over the standard amount), and

  • Per-payroll an additional amount to withhold (unchanged).

While the current Form W-4 is valid indefinitely, now may be the right time to do a “paycheck checkup” and review that your withholdings are at the level you need.  The IRS Tax Withholding Estimator can help Tax Withholding Estimator – www.irs.gov/withholding. The estimator can be used to determine if a change in withholding is necessary, it also features the ability to target a specific desired refund or to help plan for a tax-due amount close to zero.

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