2018 W-4 and Future Changes

May 23, 2018

Employee w4

2018 W-4

In response to changes made as part of the Tax Cuts and Jobs Act, in late February 2018 the IRS released an updated version of the Employee's Withholding Allowance Certificate, Form W-4, which can be found here.

The IRS has maintained the same withholding allowance structure in Form W-4 for 2018, despite the elimination of personal exemptions in the recent tax law. Employees are encouraged to use the new W-4 worksheets, and updated IRS withholding calculator, to determine the correct number of withholding allowances to claim in 2018. The agency reiterated that the Tax Cuts and Jobs Act does not require all employees to complete a new form W-4. Only those employees who were exempt from federal withholding in 2017, and who expect to be exempt again in 2018, are required to submit a new W-4 to their employers. However, the IRS recommends that employees complete a quick "paycheck checkup" using the IRS calculator to prevent over or under withholding for 2018. Paycor's system is fully compatible with the new Form W-4, and clients will continue to add or update employee withholding allowances in the same manner as before. For clients with Paycor's Onboarding service, our third party vendor will make the new Form W-4 available within the 30 day time period allowed by the IRS.

An overview of Tax Reform changes, including the 2018 Form W-4 and new withholding calculator, can be found on the IRS website at: https://www.irs.gov/newsroom/tax-reform.

2019 W-4

In early March 2018, the IRS announced it will release a completely overhauled 2019 Form W-4, and several related publications, by late summer or early fall 2018 instead of the traditional December release date. This accelerated release date is a proactive move to allow software developers and providers ample time to reflect changes included in the Tax Cuts and Jobs Act. While employees will not be required to update their W-4 in 2019, the IRS would strongly encourage them to do so.

Paycor has been involved in early discussions with the IRS and payroll industry regarding this revamped W-4, and will continue to update our clients on major developments. The IRS is committed to work with the payroll industry on these changes, providing sufficient time for a change to be implemented and completed before the 2019 tax season begins. Please look for additional future communication on these developments.

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