What to Expect with the New 2019 Form W-4

/ Industry News

Editor’s note: Post updated 12.14.18 to include the most up-to-date information

In June 
2018, the IRS released an early draft of the 2019 W-4. Upon its release, the draft received heavy criticism from payroll and tax professionals. As a result of the feedback, the IRS decided to postpone major revisions of the W-4 until 2020 and instead release a slightly modified 2019 W-4 that largely resembles the 2018 form. Here’s how it went down and what you need to know.

The timeline of events.

Since the Tax Cuts and Jobs Act (TCJA) passed in December 2017, the IRS has released a few W-4 updates. Here’s a timeline:

  • February 28, 2018: The IRS released an updated 2018 W-4 to reflect the TCJA changes.
  • June 6, 2018: The IRS released an early draft of the 2019 W-4 to better incorporate more of the personal income tax changes under the TCJA. Once it was released, payroll and tax communities raised concern that the 2019 draft was unnecessarily complicated and created a substantial risk of taxpayers claiming the wrong withholding. Additionally, since the early draft and instructions were long, and referenced up to 12 outside publications and forms, tax professionals worried they would cause unnecessary confusion for taxpayers.
  • September 20, 2018: As a result of the scrutiny, the IRS announced it will delay major revisions of the Form W-4 until the 2020 version. For the 2020 W-4, the IRS will work closely with stakeholders to make adjustments that will accurately reflect the changes encompassed in the new tax law.
  • December 13, 2018: The IRS released the 2019 W-4 with minor revisions. It largely resembles the 2018 form.  

What does this mean for employers?

While the 2020 version of the W-4 is intended to help employees improve the accuracy of their federal tax withholding, you may be wondering how to guide your employees until then. Below are the crucial steps you should take:

  • Stay on top of alerts and instructions. As mentioned, the latest 2019 W-4 form is now available. Check with your state department to see if they’ve issued a state-specific 2019 W-4. Depending on the state, you may be required to use the state version instead of the federal W-4. Lastly, refer here for further W-4 updates from the IRS. 
  • Encourage your employees to double-check their withholding. Until the substantive tax reform changes are covered in the 2020 W-4, follow our paycheck checkup instructions so your employees can ensure they’re withholding the right amounts from their paychecks.
  • Direct employees to the IRS withholding calculator. Since the withholding calculator does reflect changes under the new tax law, the IRS is urging taxpayers to use this to determine their withholding. To use it, your employees will need their most recent tax return and most recent pay stub from each job.
  • Subscribe for updates. We will continue to monitor news on W-4 updates and provide information as we have it. To make sure you don’t miss updates, subscribe to the Payroll Data blog, and follow us on LinkedIn and Facebook.

Stay on top of it!

As all employers know, year-end can be a stressful time. As we inch closer to it, you can make it easier by staying on top of these W-4 updates, and helping your employees to do the same. We’ll do our part by notifying you of new information, so you have the resources you need.

If you’re already a Payroll Data client and you’re not taking advantage of online W-4 processing, contact your client service representative (CSR) to find out how Orbit Solutions can help save you time and money. If you’re not a client and you’d like to learn more about our services and solutions, send us a note today!