Rules to Withholdings and Form W-4 Updates

The proposal was made to reflect the statutory changes in the Tax Cuts and Jobs Act. The new Form W-4 (Employee’s Withholding Certificate) no longer uses an employee’s marital status and withholding allowances. According to the IRS, the redesigned form will generally be based on the expected filing status and standard deduction for the year.

Even though the form changed, the proposed rules do not require an existing employee to complete a new form. Although employees will continue to be required to provide a new W-4 form due to changes such as a filing status change (single to married).This new form will also help streamline procedures for employees who work multiple jobs and for employees who have working spouses.For employees that fail to furnish W-4 forms at the start of a new job, the employers must treat these employees as single using the standard deduction and no other adjustments.The new regulations provide for either a percentage of withholding or a wage bracket method of withholding. These tables can be found at the IRS Publication 15-T, Federal Income Tax Withholding Methods.For full article and source information, click here.