The IRS recently issued guidance on tax withholding for the coming year. The redesign of the W-4 has been tabled until 2020 after the proposed form met with heavy criticism from groups like the American Society of CPAs. The W-4 for 2019 will be essentially the same as the 2018 with the exception of changes to the “withholding allowance” terminology used in the Tax Cuts and Jobs Act (TCJA.)

For changes due solely to the TCJA, the notice also continues the suspension of the requirement to furnish Forms W-4 within 10 days. The default for all employees who fail to provide a W-4 will continue to be single with zero (0) withholding allowances.

The IRS and U.S. Treasury Department jointly announced they intend to update the regulations under section 3402 to explicitly allow taxpayers to use the online withholding calculator or Publication 505, “Tax Withholding and Estimated Tax”, instead of the worksheets to Form W-4. The IRS and Treasury Department also intend to eliminate the combined income tax withholding and employee FICA tax withholding tables under Treas. Reg. § 31.3402(h)(4)-1(b).

The IRS will also allow taxpayers to reduce their withholding in accordance with the qualified business income deduction under section 199A under section 3402(m) of the tax code.

The notification requirements for the withholding compliance program have also been modified. For 2019, the withholding on annuities and other similar periodic payments where no withholding certificate is in effect will be based on treating the payee as a married individual who’s claiming three (3) withholding allowances under section 3405(a)(4) of the tax code.

If you have any questions related to employee tax withholding, please contact your Zinner tax expert.