The Ultimate Test Automation Guide_ Best Practices and Tips.pdf
How the IRS 2019 Form W-4 Will Change Payroll
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Employer Solutions
2. | Employer Solutions
Some Housekeeping Items
• This presentation is about 45 minutes long
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• Copies of the slides are available under Handouts
• An on-demand video recording of this session will be
available at www.netatwork.com
5. | Employer Solutions
New W-4 Postponed Until (At Least) 2020
“Following feedback from the payroll and tax
communities, the Treasury Department and the
IRS will incorporate important changes into a
new version of the Form W-4, Employee’s
Withholding Allowance Certificate, for 2020. “
9/21/2018
6. | Employer Solutions
W-4 Timeline
January 2018
•Tax Cuts and
Jobs Act goes
into effect.
•New
withholding
tables
released
• Significant W-
4 revision is
required
including no
exemptions
February 2018
•2018 ‘interim’
W-4 released
•Updated
Online
Withholding
Calculator
released
•W-4 combines
new tax tables
with
‘exemptions’
method
June 2018
•Draft 2019 W-
4 Released
•Significant
criticisms from
payroll and tax
consulting
community –
form too
complex
•Draft version 2
planned for
late August.
September 2018
•IRS announces
delay in
implementing
W-4 until
2020 Tax year.
•‘Interim’ 2019
W-4 planned
release in
October
2019
•IRS to
continue
working on
draft W-4.
•Payroll
providers
monitor for
changes that
affect
programing.
9. | Employer Solutions
Proposed Payroll Instructions
• Step 1: Divide each of the amounts on Lines 5, 6, 7 and 8 by the total number of pay periods in the year.
• Step 2: Add the results from step 1 for Lines 5 and 8 to the employee’s wages per pay period.
• Step 3: Subtract the result from step 1 for line 6 from the result from step 2. Depending on your withholding
method, you may need to adjust this amount by the value of the employee’s withholding allowances.
• Step 4: Figure the income tax withholding using the result from step 3 as taxable wages, with 2 (single or
married filing separately) or 3 (married filing jointly or head of household) allowances for the filing status on
Line 3 of the employee’s W-4.
• Step 5: Reduce the income tax withholding result from step 4 by the income tax credits per pay period
figured in step 1 for Line 7. But don’t reduce withholding below zero.
• Step 6: Separately figure the income tax withholding on the amount, if any, from step 1 for Line 8. Use 2
(single or married filing separately) or 3 (married filing jointly or head of household) allowances for the filing
status on Line 3 of the employee’s W-4.
• Step 7: Subtract the income tax withholding result from step 6 from the result in step 5, to figure the
amount of income tax withholding per pay period.
• Step 8: Add the amount, if any, from Line 9, to the income tax withholding per pay period figured in step 7.
This is the amount of income tax to withhold per pay period for the employee.
11. | Employer Solutions
Tax Bracket Pre-2017 Tax Act Under 2017 Tax Act
Standard Deduction
Single: 6,350
MFJ: 12,700
HoH: 9,350
Single: 12,000
MFJ: 24,000
HoH: 18,000
Personal Exemption $4,050 per Individual
*Subject to AGI Phase-out
Repealed
Mortgage Interest
Debt Limit: $1.1M
2nd
Home Allowed: Yes
Home Equity Interest Allowed: Yes
Debt Limit: $750,000
2nd
Home Allowed: Yes
Home Equity Interest Allowed: No
Taxes
Itemized Deduction Allowed for:
• Real Estate Tax (U.S. Property Only)
• Personal Property Tax
• State/Local Income Tax (or sales tax)
*Subject to AGI Phase-out
Itemized Deduction Limited to $10,000 for the
Aggregate of State & Local Property, Income Taxes,
and Sales Taxes
Charitable Deductions Limited to 50% AGI
Limited to 60% AGI
*80% Deduction for Athletic Tickets Repealed
Miscellaneous
Deductions
Itemized Deduction Subject to 2% AGI Floor (includes employee
business expense, investment expenses, tax prep fees,
professional dues, etc.)
Repealed
Medical Expenses Subject to 10% AGI Floor Subject to 7.5% AGI Floor
*Retroactive to 2017
Individual Deductions
12. | Employer Solutions
Modest decrease
in Federal Income
Taxes
Possibility that
current withholdings
are incorrect.
13. | Employer Solutions
Payroll Responses
• Educate and encourage employees
to use the IRS payroll calculator
• Be ready to provide copies of
necessary documents to
employees
• Continue to monitor the progress
next year toward revisions.
14. | Employer Solutions
Using the Tax Calculator
• Most recent pay stub
• Copy of last year’s Tax Return
• If circumstances change during the year, come back to this Calculator
to make sure that withholding is still correct.
• The Withholding Calculator does not ask to provide sensitive
personally-identifiable information
• The IRS does not save or record the information you enter on the
Calculator.*
*However, your web browser probably will.
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28. Thank You For Attending!
| Employer Solutions
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