The Idaho State Tax Commission announced release of a new state Form ID W-4, Employee's Withholding Allowance Certificate. The new form may be found on the agency's website and the agency plans to mail copies of the new form to the more than 70,000 employers with Idaho payroll withholding accounts.

Idaho joins several other states (i.e., Montana, Oklahoma and Oregon) in releasing a new state Form W-4 due to the Tax Cuts and Jobs Act (TCJA).

Historically, Idaho used the federal Form W-4, allowing employees to request a different Idaho income tax withholding amount by claiming fewer dependents for Idaho purposes. Employees were allowed to add this state information at the bottom of the federal Form W-4, but could not request less Idaho income tax withheld by listing more dependents.

According to the Department's announcement, the goal is to get "many thousands of Idahoans who have not yet updated their withholding since [the passage of the federal TCJA] to use the Idaho W-4 and more easily get their [state withholding tax] calculation right for 2019."

"The new Form ID W-4 gives us an important new tool for helping Idaho taxpayers properly calculate how much of each paycheck should be withheld to cover their Idaho individual income tax liability," Tax Commission Chairman Ken Roberts said.?"While the federal W-4 form is still needed for calculating federal withholding, the Idaho W-4 is a shorter, simpler and far more accurate way of determining your Idaho withholding. We hope it encourages more taxpayers to update their W-4 and avoid unexpected tax bills."

The Department further explains that the federal and state tax systems now diverge when it comes to individual income tax. No longer is federal withholding information applicable for use on Idaho tax forms. The Idaho W-4 form provides a better way for employees to calculate and update their withholding information.

Supplemental wages

The supplemental withholding rate, which was reduced to 6.925% (down from 7.4%) in mid-2018, is currently unchanged for 2019.

Supplemental wages are those wages paid to an employee in addition to the employee's regular wages, such as bonuses, commissions, overtime pay, payments for accumulated sick leave, severance pay, awards, prizes, back pay, retroactive pay, expense allowances paid under a nonaccountable plan, payments for nondeductible moving expenses and other similar payments. Employers may choose to compute withholding on supplemental wages by combining the supplemental payment with regular wages and treating them as a single payment or by multiplying the supplemental payment by the supplemental withholding rate.

Employer withholding guide revised, no revision to withholding tables for 2019 at this time

The agency released a revised Guide to Idaho Income Tax Withholding, dated January 7, 2019, to reflect the new Form ID W-4 guidance, but the withholding tables within the guide have not changed since the June 2018 revision. (Telephone conversation, agency representative, January 8, 2019.)

The Idaho personal income tax schedules are adjusted for inflation each year. The Commission releases revised income tax withholding tables when the accumulated annual inflation adjustments cause a substantial change, usually in the middle of the year.

Revised withholding tables were released in May 2018 because legislation eliminated personal and dependent exemptions, and most itemized deductions have been eliminated or capped. Starting with tax year 2018, the Idaho withholding allowances used in the percentage computation method are the number of children who qualify for the new Idaho Child Tax Credit. This number is reported on the new Form ID W-4.(EY Payroll Newsflash Vol. 19, #079, 5-2-2018.)

For more information on Idaho state income tax withholding, see the agency's website or call +1 208 334 7660 or +1 800 972 7660.

2018 Forms W-2 due January 31, 2019

Idaho calendar year Forms 967, Idaho Annual Withholding Report, and W-2 are due January 31, 2019. Forms 1099 reporting income tax withholding are due by February 28, 2019.

Idaho employers that meet the IRS requirements to file electronically and have 50 or more employees working in Idaho are required to file Forms W-2 electronically. The deadline remains January 31, 2019, whether filing electronically or on paper.

Forms 1099 may be filed with the 2018 Forms W-2 and Form 967 by the due date of January 31, 2019, or by February 28, 2019 with an amended copy of the Form 967 filed with Forms W-2 (write "Amended" at the top). See the agency's website for more information on Forms 1099 filing.

Forms 1099 that don't have Idaho income tax withholding should be attached to Idaho Form 96, Idaho Annual Information Return or a copy of federal Form 1096 and mailed to the agency.

Go here for instructions for filing Form 967. Specifications for electronically filing calendar year 2018 Forms W-2 can be found here. The 2018 Forms 1099 specifications can be found here.

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