IRS Pumps The Brakes On Major Form Changes
Do you remember the major announcement the IRS made about the Form W-4 changes that were set to take place in 2019? Well, in late September, the IRS announced that the roll out of those planned revisions would be delayed until the 2020 version is released. This new development means the 2019 form will be more similar to the 2018 version than previously stated.
Why The Change?
The IRS changed its tune on rolling out the major changes after receiving a significant amount of feedback from tax and payroll professionals. By delaying the major W-4 face-lift, employers will have more time to prepare themselves for the implementation of the 2020 version.
The 2019 version of the W-4 form will be released within the next few weeks. In the meantime, the IRS has pledged to continue working closely with tax and payroll professionals in an attempt to “fully reflect” the changes brought about by the Tax Cuts and Jobs Act (TCJA). The 2020 forms goal is to increase the accuracy of federal income tax withholding.
How We Got Here
After the TCJA became the law of the land, the withholding system underwent some changes, including a Form W-4 overhaul and modifications to individual taxpayer rules which went into effect immediately. In early 2018, to to help taxpayers decide if they need to adjust their withholding allowances, the IRS released new tax calculators and worksheets. As a follow-up, the IRS sent out a flyer encouraging employers to remind their employees to check their federal withholdings to make sure they weren’t under-withheld in 2019. Finally, in June 2018, a draft of the 2019 Form W-4 was released. Multiple organizations submitted negative feedback with regard to the form’s release date and complexity. The IRS took this feedback to heart and delayed major revisions from taking place to Form W-4 until the 2020 version of the form.
What Does This Mean?
The primary takeaway from the IRS’s postponement announcement is that the 2017 Form W-4 can still be used through 2018. This also means that employees should be encouraged to review their payroll documents to make sure they have the correct withholding for 2018.
If you have any questions about the postponement or the major revisions set to take effect on the 2020 version of Form W-4, email Rea & Associates to be put into contact with one of our industry specialists.
By Dee Gray, CPP (New Philadelphia office)