12 August 2019 IRS releases new Tax Withholding Estimator so employees can confirm their income tax withholding In IR-2019-139 the IRS announced its release of a new Tax Withholding Estimator to assist employees in confirming that the information on their Form W-4 will result in federal income tax withholding that more closely approximates the federal income tax they will owe for the year. The new mobile-friendly tool allows users to provide details about their estimated income from most sources and the tax credits and itemized deductions they plan to claim. In contrast to the previous IRS withholding tax calculator, this tool automatically determines how the Form W-4 should be completed based on the information provided by the user and includes a link to download the Form W-4 for completion and submission to the employer. The IRS explains that the new Tax Withholding Estimator will help anyone doing tax planning for the last few months of 2019 and is built to work with the extensively revised Form W-4 that the IRS intends to release in 2020. Under the Tax Cuts and Jobs Act of 2017 (TCJA), effective January 1, 2018 through December 31, 2025, substantial changes were made to the IRC's personal income tax provisions, including the elimination of the personal exemption deduction. The TCJA allowed the IRS to administer the federal income tax withholding rules under IRC Section 3402 without regard to the TCJA for tax years beginning before January 1, 2019. (TCJA section 11041.) The IRS issued an extensively modified draft Form W-4 for use in 2019; however it announced that as a result of feedback from payroll and tax professionals, it delayed extensive changes to the form until 2020. Like in 2018, the 2019 Form W-4 continues to contain line 5 on which employees can claim personal allowances. News sources reported that because the Form W-4 allowed taxpayers to claim personal allowances, many overlooked the change in the tax law and some faced unexpected 2018 federal income tax underpayments because of the personal allowances they were allowed to claim on the Form W-4. The IRS urges everyone to review their withholding for 2019, particularly if they faced an unexpected tax bill or a penalty when they filed for tax year 2018, made income tax withholding adjustments in 2018 or experienced a major life change. Employers should consider telling their employees about the new Tax Withholding Estimator and encourage employees to check their withholding as soon as possible.
Document ID: 2019-1451 | |||||||
