How the IRS 2019 Form W-4 Will Change Payroll
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This webinar discussed changes to the W-4 form that will take effect in 2020. The proposed 2019 W-4 was very complex with 11 pages of instructions, so it has been postponed. Modest decreases in federal income taxes are possible for some employees under the new tax law, so payroll departments should encourage employees to use the IRS payroll calculator to ensure accurate tax withholding. The presentation concluded by noting resources payroll professionals can use to stay up to date on the W-4 changes.
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How the IRS 2019 Form W-4 Will Change Payroll
- 1. Start Time: 2:00pm EST Live Webinar: Webinar Audio: You can dial the telephone numbers located on your webinar panel. Or listen in using your microphone or computer speakers. Welcome! Employer Solutions
- 2. | Employer Solutions Some Housekeeping Items • This presentation is about 45 minutes long • All phone lines are muted • Please use the GoToWebinar Question box to ask questions • Copies of the slides are available under Handouts • An on-demand video recording of this session will be available at www.netatwork.com
- 3. | Employer Solutions Today’s Presenter Mark Boutilier Senior Solutions Engineer Net@Work Employer Solutions Practice Email: mboutilier@netatwork.com Phone: 207.480.4805 (direct) LinkedIn: https://www.linkedin.com/in/mboutilier/
- 4. | Employer Solutions “Begin with the End in Mind”
- 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.
- 7. | Employer Solutions Proposed Changes to the W-4
- 8. | Employer Solutions Eleven Pages of Instructions
- 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.
- 10. | Employer Solutions So Now What?
- 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.
- 15. | Employer Solutions General Information
- 16. | Employer Solutions General Information
- 17. | Employer Solutions General Information
- 18. | Employer Solutions Income and Withholding
- 19. | Employer Solutions Income and Withholding
- 21. | Employer Solutions Surprising Results
- 23. | Employer Solutions Excellent Reason to Consider ESS
- 25. | Employer Solutions One Page Reminder from the IRS https://www.irs.gov/pub/irs-pdf/p5303.pdf Included in the handouts
- 26. | Employer Solutions Questions, Thoughts or Comments?
- 27. Other webinars you might be interested in . . . . . | Employer Solutions When Employees Leave: Managing the Risks October 11 11:00 AM EST HR Strategic Planning – Charting the Course of HR Part 2 of 2 October 12 1:00 PM EST
- 28. Thank You For Attending! | Employer Solutions 800-719-3307 www.netatwork.com netatwork.com/blog Net@Work YouTube Follow us on Twitter: @netatwork_corp Follow Net@Work on LinkedIn Follow Net@Work on Google+ Follow Net@Work on Facebook Connect with