Corporate Payroll Services

The Internal Revenue Service (IRS) announced last Thursday that it will delay major revisions to the Form W-4, Employee’s Withholding Allowance Certificate, until the 2020 version.  The 2019 version of the Form W-4 will be similar to the current 2018 version and will be made available in the coming weeks.

After enactment of the Tax Cuts and Jobs Act in December 2017, the IRS and Treasury Department began modifying the withholding system, including the Form W-4.  Many changes affecting individual taxpayer rules went into effect immediately in 2018, including revised tax brackets, the doubling of the standard deduction and elimination of the personal exemption.  So, in February, the IRS released a new withholding calculator and updated worksheets to help taxpayers determine if an adjustment in withholding allowances was necessary.  During the summer they followed up with a “Paycheck Checkup” flyer to encourage employers to remind employees about reviewing their federal withholding allowances, so they would not find themselves under-withheld come April 2019.

However, in June, when the IRS released a draft version of the revised 2019 Form W-4 and instructions for public comment, they received criticism from the National Association of Enrolled Agents (NAEA), the American Institute of CPAs and the American Payroll Association (APA).  These organizations cited privacy concerns, since the draft requested spousal and family income information that employees might be wary of sharing with their employers.  They also called for simplification; the NAEA pointed out that “the taxpayer is directed to reference up to 12 other publications” to correctly fill out the form.  The APA requested that the IRS publish the final version by the end of August “so that there is sufficient time to upgrade software systems and payroll processes.”

In its announcement Thursday, the IRS stated that they will continue to work closely with the payroll and tax community as it makes additional changes to the Form W-4 for use in 2020.  It also encouraged employees to perform another “paycheck checkup” to ensure proper withholding for 2018.


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