20 November 2019 Nebraska release of new state Form WT-4; no change to withholding tables for 2020; 2019 Forms W-2 filing reminders The Nebraska Department of Revenue released new Form W-4N, Employee’s Nebraska Withholding Allowance Certificate, for use beginning January 1, 2020, by a new employee to indicate the number of personal exemptions an employer should use in determining the amount of Nebraska personal income tax to withhold from the employee’s wages. Prior to this release, the federal Form W-4 was used for this purpose. Employees who have completed the federal Form W-4 prior to January 1, 2020, are not required to submit a Nebraska Form W-4N and employers will continue to use the federal Form W-4 on file for Nebraska withholding purposes, unless employees need to make future changes to their personal exemptions. In other words, for every 2020 federal Form W-4 employers receive from Nebraska employees, a Nebraska W-4N must also be completed. The employer must withhold at the highest rate, as if the employee were single and claimed no withholding allowances, if a Nebraska Form W-4N is not submitted with the updated federal Form W-4. The Nebraska Form W-4N was developed due to significant differences between the federal and Nebraska laws regarding standard deductions and because personal exemptions are allowed on the Nebraska personal income tax return. According to the Form W-4N instructions, an employer may be subject to a penalty of up to $1,000 for each employee underwithheld if the employee’s low amount of income tax withholding is not substantiated. A taxpayer who intentionally claims an excessive number of exemptions is guilty of a Class II misdemeanor. Any person who willfully attempts to evade the Nebraska income tax is guilty of a Class IV felony. Any person who willfully fails to withhold, deduct, and truthfully account for and pay over any income tax withheld is guilty of a Class IV felony. The Department announced that an updated Circular EN, Nebraska Income Tax Withholding for Wages, Pensions and Annuities, and Gambling Winnings, will not be issued for 2020. Employers are instructed to continue to use the 2017 income tax wage-bracket and percentage method withholding tables contained in the publication for 2020. (Telephone conversation, Nebraska Department of Revenue.) Where supplemental wages (bonuses, commissions, overtime pay, severance pay associated with Nebraska employment, and sales awards) are paid at the same time as regular wages, the income tax deducted and withheld is determined as if the total of the supplemental and regular wages were a single wage payment for the regular payroll period. If supplemental wages are paid at a different time, the employer may determine the withholding by adding the supplemental wages either to the regular wages for the current payroll period, or to the regular wages for the last preceding payroll period within the same calendar year. The employer may also elect to withhold on the supplemental wages by using a flat 5% withholding rate. Employers using wage bracket tables may continue to use the shaded/non-shaded areas of the tables to determine if the special withholding procedures apply. The special withholding procedures must be followed if the calculated result is not at least 1.5% of the employee’s taxable wages. See page 2 of the 2017 Circular EN and the Department’s frequently asked questions about withholding tax for details on when to use the special withholding procedures, when they may be avoided and the penalties that may be assessed for failure to use the special withholding procedures. An employer may withhold an amount that is less than 1.5% of the employee’s taxable wages if the employee provides sufficient documentation to verify that a lesser amount of income tax withholding is justified in the employee’s particular circumstance. Documentation may include: Without documentation, the employee’s income tax withholding must be set at 1.5% or at another level within the nonshaded area of the income tax withholding tables. State copies of 2019 Forms W-2, W-2G, 1099-MISC, 1099-R, and Form W-3N, Nebraska Reconciliation of Income Tax Withheld, are due January 31, 2020. These forms must be e-filed when the employer has over 50 forms to report. See the Department’s Form W-2 specifications, last updated September 2019, for more information on electronic filing. See also the Department’s frequently asked questions regarding electronic filing of Forms W-2. For more information on Nebraska withholding tax, see the Department’s website.
Document ID: 2019-2070 | |||||||||
