What Employers and Employees Should Know About 2019 Tax Withholding Changes

A revised Form W-4 for 2019 is on the way and it’s just the latest tax withholding change for employees. Earlier this year, IRS officials updated their withholding tables and issued a new Form W-4 for 2018 after passage of the Tax Cuts and Jobs Act last December. The act reduced employees' income tax rates, adjusted tax brackets and eliminated personal exemptions.

With all the changes, 2019 is an important year for workers to review whether they’re having the right amount of taxes withheld from their paychecks, especially those who belong to a multiple-income family, claim the child tax credit, have dependents over age 17, itemize their deductions or have high incomes or complex tax situations.

The IRS plans to release yet another W-4 and the current draft is a much shorter, simpler version then what’s currently being used. It cuts the current W-4 in half, reducing it from four pages to less than two. Employees use IRS Form W-4 to establish marital status and withholding allowances for federal income tax withholding calculations. Many states use the Federal Form W-4 for state withholding purposes. Here are some of the drafted changes:

• The form no longer has a line to report the number of allowances the taxpayer is claiming.
• If the taxpayer’s only source of income is a job and they do not itemize, the form can be left blank and there are default allowances based upon the filing status.
• The form allows employees to specify the amount of deductions they plan to take or credits they plan to claim, as well as other income they expect to earn.
• If employees have more than one job, they can enter the amount of total wages for each job.

Employees who don't want to provide this information to their employer can use the online IRS calculator to find their appropriate withholding figure and use that dollar amount to complete the form. Here are a few things for taxpayers to know about updating Form W-4:

• The Withholding Calculator will help determine if you should complete a new Form W-4.
• The calculator will provide the information to put on a new Form W-4.
• Taxpayers who use the calculator to check their withholding will save time because they don’t need to complete the Form W-4 worksheets. The calculator does the worksheet calculations.

If you choose to partner with a PEO like FrankCrum, you’ll have a dedicated payroll coordinator to work with you during each payroll cycle and a team of experts to handle complex payroll issues and tax obligations. Contact us to learn more about FrankCrum’s payroll services or click here to read our blog on other tips for payroll processing.