IRS Offers Guidance on Draft Form W-4 for 2019

The most comprehensive resource available for payroll professionals. This service provides payroll news, white papers, custom research answers, webinars on the hottest payroll topics, survey and...

By Jazlyn Williams and Jamie Rathjen

Previous versions of the federal Form W-4 that are on file with employers may be used despite the removal of references to withholding allowances in the 2019 draft version of the form that was issued this week, an Internal Revenue Service official said June 7.

A draft of the 2019 Form W-4, Employee’s Withholding Allowance Certificate, released June 6, reflected changes under the federal tax code overhaul (Pub. L. 115-97), signed Dec. 22, 2017, by President Donald Trump. Payroll professionals had anticipated that the elimination of personal exemptions would require the refiling of Forms W-4 by employees and changes to payroll systems. Draft forms are not final forms and are not to be filed by taxpayers.

“One of the major goals was to make this backwards-compatible and not require every employee to fill out and present a new W-4,” said an official in the agency’s forms and publications department.

A separate 11-page set of draft instructions was released June 7. Previously, instructions for W-4s were included with the form.

Continued compatibility with older Forms W-4 was not expected to be a temporary measure, said an official in the Treasury Department’s tax policy department. “We expect it to work for as long as people have old W-4s in effect, which could be many years,” the tax policy official said.

The IRS’s goal for the 2019 Form W-4’s final design is to fully implement provisions under the new federal tax law (Pub. L. 115-97), the tax forms official said.

“We want to overall improve withholding accuracy, improve transparency for employees,” the official said. The new form reports adjustments to income more directly instead of the former reporting of withholding allowances, the official said.

The IRS usually does not expect drafts of forms to change before final drafts are released, but in this case changes are expected, the official said.

The drafts “reflect the Treasury’s and the IRS’s position on what we believe is a better product in terms of transparency and ease of calculation, but it’s being shared now as an invitation to comment,” the official said. The form is to have a second early release in the summer after a 30-day comment period, which is expected to end July 8, the official said. Comments may be sent by email to wi.w4.comments@irs.gov.

A final draft of Form W-4 is to be released in mid- to late August, the official said.

Examples in the draft instructions that were released June 7 used values from the 2018 wage bracket withholding tables. The IRS plans to release draft withholding tables to use with the instructions, the official said; no date was given. Final withholding tables for 2019 were expected to be released by the end of 2018.

Programs to help employers and tax professionals fill out the new W-4 are to be available in the fall, the official said.

Guidance on Exemptions for Wage Levies

Scott Mezistrano, IRS representative for industry stakeholder engagement and outreach, offered additional guidance related to Publication 1494, “Tables for Figuring the Amount Exempt from Levy on Wages, Salary, and Other Income--Forms 668-W, 668-W(ACS) and 668-W(ICS).”

Employees with an active levy that started before Jan. 1, 2018, may have their exemptions recalculated with the revised Publication 1494, which was released May 1. In cases of a recalculation, the employee must complete a new Statement of Exemptions and Filing Status and submit it to the employer, he said.

Although sample Forms 668-W are not available, IRS Notice 1439, “Figuring the Amount Exempt from Levy on Wages, Salary, and Other Income--Forms 668-W, 668-W(ACS) and 668-W(ICS),” includes a sample statement of exemptions and filing status, Mezistrano said.

Publication 1494 was revised to reflect the new tax law and to add a new column for employees claiming zero dependents. The 2018 version of the publication was first released in January, but at the time only was adjusted for inflation and did not take into account the new federal tax law.

For all levies, if an employee’s dependents, filing status, or eligibility for an additional standard deduction change while the levy is in effect, the employer may offer the taxpayer a new statement to change the amount that is exempt, Mezistrano said.

More guidance is expected for employers that used the January edition of Publication 1494 regarding levies, Mezistrano said.

To contact the reporter on this story: Jazlyn Williams in Washington at jwilliams@bloombergtax.com and Jamie Rathjen in Washington at jrathjen@bloombergtax.com. To contact the editor responsible for this story: Michael Baer at mbaer@bloombergtax.com.

Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.

Try Payroll Decision Support Network