Get Ready for the New Form W-4 Updates for 2019

07/10/18 | 8:00AM | Posted by TEAM Software


Draft form, instructions and everything else you need to know.

Updated: September 26, 2018.

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. The 2019 version of the Form W-4 will be similar to the current 2018 version. A new draft version of the W-4 for 2019 will be available in the coming weeks.

Updated: July 18, 2018.

On June 5, 2018, the Internal Revenue Service (IRS) published the 2019 Draft Form W-4 for public comment, then followed up with instructions on June 7, 2018. This is an early release of the draft and they’re anticipating changes being made before the final version is released later this summer. You should familiarize yourself with the new draft form and instructions via the links below:

TEAM is dedicated to ensuring our software solutions meet the ever-changing compliance needs of our customers. While we’re committed to keeping you informed, it’s important to do your own research, and consult your own legal and tax advisors when necessary too.

What is the Form W-4?

Before looking at the changes, let’s review the purpose of the Withholding Certification. Form W-4 (Employee’s Withholding Allowance Certificate) is a document issued by the United States IRS. The Form W-4 is used by employees to define the parameters used to estimate the amount of federal income tax to be withheld from a paycheck.

If an employee fails to give a properly completed Form W-4, the employer can withhold federal income taxes at a higher rate. An employee may be subject to a penalty if he or she submits, with no reasonable basis, a Form W-4 that results in less tax being withheld than is required.

Let’s look at the changes.

The changes are in response to the 2017 tax code overhaul, known as the Tax Cuts and Jobs Act (Pub. L. 115-97) eliminating personal exemptions, which for decades was the basis of withholding allowance amounts claimed on the form. The new Form W-4 also indicates that the IRS plans to change the 2019 federal income tax withholding tables, with the removal of the withholding allowance amounts, triggering required reconfiguration of systems that employers use to calculate withholding amounts. The new Form W-4 also comes with an 11-page set of employee instructions that will need to be reviewed.

Line by line review

Line 5 (New) – Enter potential non-wage income.

See Pub. 505, Tax Withholding and Estimated Tax.

Line 6 (New) – Enter amount of itemized deductions.

Itemized deductions (example: education, student loan, health savings, additional standard deductions, and more).

Line 7 (New) – Enter amount, if any, of tax credits, such as the child tax credit.

The sum of the tax credits, if any, the employee expects to claim in 2019.

Line 8 (New) – Complete this line only if you have multiple jobs at the same time or file as married filing jointly and both you and your spouse work; otherwise, leave it blank. Enter the total pay of all lower paying jobs.

Completed by employees who either have multiple jobs or who anticipate that their individual tax-filing status will be married filing jointly, with their spouse also employed. If either or both of these situations are applicable for an employee, the employee would use Line 8 on the 2019 W-4 to indicate the total annual wages of jobs held by individuals in the employee’s household that have lower annual wages than the employee’s job for which the 2019 W-4 was filed.

Line 9 (Existing) – Additional amount, if any, you want withheld from each paycheck.

Line 10 (Existing) – Claim exemption from withholding for 2019, and you certify that you meet both of the following conditions for exemption.

Last year you had a right to a refund of all federal income tax withheld because you had no tax liability, and this year you expect a refund of all federal income tax withheld because you expect to have no tax liability.

Feedback on the draft Form W-4

If you wish, you can submit comments about Draft Form W-4 to TEAM has provided the following feedback to the IRS through the American Payroll Association (APA):

  1. Employers are not required to obtain a new Form W-4 from the employees in 2019.
    1. Will the IRS have two sets of tables or is the employer expected to translate the fields on the old 2018 W-4 to the new 2019 W-4?
    2. Employers can’t support two systems (different withholding tables) because of the employer remunerations and liability that are based on the total payroll.
  2. What is the expectation if the employee submits an updated Form W-4 after the first of the year?
  3. Will instructions be provided to the employee on how to translate the information provided in the IRS Withholding Calculator to the new Form W-4?
  4. Will there be any changes on the Forms 941, 940 or W-2?
  5. Line 8 requires the employee to enter other earnings, along with spouse/partner earnings. Will there be an exception process for employees that do not want employers to have the additional earnings?
  6. When will the employer instructions be published?
  7. Timing: the final copy of the Form W-4 is expected at the end of summer. The original ask from the APA was to give payroll services/providers, a six-month development window. At this point the January 1 go-live date is at risk, because payroll services/providers do not have the final Form W-4, tax tables or the related form changes. Please remember in some cases the first payroll of 2019 will be processed in the middle of December. All software changes must be delivered to clients by the first week in December.

To see more information on this subject, see the update from the APA.

July 3, 2018 Update

The American Payroll Association provided comments to the IRS on the following subjects:

  • Preliminary draft 2019 Form W-4, Employee’s Withholding Allowance Certificate
  • Form W-4 instructions
  • Employee withholding calculator