One of the biggest political developments last year was the passage of Tax Reform. In addition to changes to credits, deductions, and business tax rates, the tax reform law changes the way employers calculate wage withholding for their employees.
For this reason, the IRS has released an “early release draft” of the 2019 IRS Form W-4, which incorporates a number of changes resulting from tax reform as well as the new withholding requirements. The agency has also updated their website with information on how tax reform effects taxpayers and businesses.
New Draft Form W-4
While there is an “early release draft” of the new Form W-4, employers should still continue to use the old W-4 (which was last revised in 2018). The IRS is expected to release a revised draft or final Form W-4 in the coming months, at which point more official information will be available to employers.
Note, however, that employees who wish to update their withholding should be encouraged to use the online calculator found on the IRS site.
"Employers should encourage their employees to review their individual tax situation by using the online withholding calculator to avoid tax filing surprises," says Jill Grasso, Tax Manager at CheckWriters. "There have been some significant changes to the withholding tables and credits and deductions which could have quite an impact on employees' personal tax filings - employers can be proactive by ensuring their workforce is aware of the tax reform resources available."
New IRS Site
The IRS has launched an updated tax reform section useful to employees and employers.