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Form W-4 and Withholding Tax Calculator to Be Revised

BY: APA Staff | 02/07/18

On January 11, the IRS released Notice 1036, Early Release Copies of the 2018 Percentage Method Tables for Income Tax Withholding. The IRS also issued news release IR-2018-05 and posted Frequently Asked Questions, which provide additional information on withholding changes for 2018 and 2019.

The withholding tables were released later than usual because Public Law 115-97, unofficially known as the Tax Cuts and Jobs Act (TCJA) was not enacted until December 22, 2017. The new withholding tables are designed to work with the Forms W-4 that employees have already filed with their employers to claim withholding allowances. This is intended to minimize the burden on employees and employers. Employees do not have to do anything at this time.

Withholding Tax Calculator to Be Revised

For people with simpler tax situations, the new tables are designed to produce the correct amount of tax withholding. To help people determine their withholding, the IRS is revising its withholding tax calculator. The IRS anticipates that the calculator will be available by the end of February.

Form W-4 to Be Revised

The IRS is also working to revise Form W-4, Employee’s Withholding Allowance Certificate. The revised calculator and new Form W-4 can be used by employees to update their withholding in response to the TCJA or changes in their personal circumstances in 2018, and by employees starting a new job. Until a new Form W-4 is issued, employees and employers should continue to use the 2017 Form W-4.

Withholding Guidance for 2019

For 2019, the IRS anticipates making further changes involving withholding. The IRS will work with the business and payroll community to encourage workers to file new Forms W-4 next year and share information on changes in the new tax law that impact withholding.