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January 17, 2020
2020-0132

Missouri 2020 withholding tables released; Form MO W-4 updated; Form W-2 filing deadline differs for small and large employers

The Missouri Department of Revenue released its 2020 Missouri Employer's Tax Guide, which includes the 2020 withholding computer formula and wage-bracket tables. Also released is the 2020 Form MO W-4.

The Missouri net general revenue amount for fiscal year 2019 did not exceed the trigger needed to reduce the top income tax rate by 0.1% for 2020, leaving the maximum withholding tax rate 5.4% for calendar year 2020. (2018 HB 2540; email response to inquiry, Missouri Office of Administration, 12-16-2019.)

Supplemental Wages

The supplemental rate of income tax withholding remains at 5.4% for calendar year 2020.

If the employee has supplemental or overtime pay, and the payment is included with normal wages, apply the withholding formula to the total payment as if it was a regular payroll wage payment.

If the employee has supplemental or overtime pay and these wages are paid separately from regular wages, you may withhold using one of the following two methods.

  • Withhold a flat percentage rate of 5.4% of the supplemental wages.
  • Add the supplemental wages to the regular wages paid for the payroll period and apply the withholding formula to the total amount as if it was a regular payroll wage payment. Then subtract the tax already withheld from the regular wage payment and withhold the remaining tax from the supplemental payment.

Employer timely compensation deduction available for employers that file and pay on time

Private employers may receive a "timely compensation deduction" if their Form MO-941, Employer's Return of Income Taxes Withheld, is filed and the taxes timely paid. The deduction begins at 2% and is reduced to 1% once the employer's year-to-date withholding reaches $5,000 and to 0.5% once the year-to-date withholding reaches $10,000.

Authorized by Section 143.261 of the Revised Statutes of Missouri, the timely compensation deduction allows businesses to deduct and retain as compensation from timely income tax withholding remittances the following percentages of the total amount of tax withheld and paid annually:

Compensation

percentage

Year-to-date total

January - December

2%

$0 to $5,000

1%

$5,001 to $10,000

0.5%

Over $10,000

Businesses claim this deduction on line 2 of the Form MO-941, Employer's Return of Income Taxes Withheld.

Form MO W-4 revised for 2020

The Department has released an updated Form MO W-4 for calendar year 2020. Employees are required to submit Form MO W-4 to their employer when beginning employment, when their filing status changes or to adjust the amount of withholding. Because there are no longer allowances in the Missouri withholding tables, employees can no longer increase or decrease the amount withheld from their paychecks by claiming allowances that are not consistent with their specific filing situation.

The Department encourages all employees to review their Form MO W-4 and to make corresponding changes based on their filing status. If employees need additional amounts withheld they should add the additional amount on line 2 of the updated MO W-4.

Note that federal Form W-4 is not used for Missouri state income tax withholding purposes.

Missouri annual standard deduction increases for 2020, personal allowances eliminated

As we reported previously, the Department follows federal tax law and, as a result, there are now no personal allowances and the annual standard deduction amounts were increased as of 2018.

The 2020 Missouri annual standard deduction amounts are as follows

  • Single or married filing separately: $12,400 (up from $12,200)
  • Married and spouse works: $12,400 (up from $12,200)
  • Married and spouse does not work: (this is determined by the check box on Form MO W-4, Line 1, and is not a separate filing status): $24,800 (up from $24,400)
  • Head of household: $18,650 (up from $18,350)

Missouri 2019 Forms W-2 due by January 31, 2020 for large employers, February 28, 2020 for small employers

Missouri employers filing 250 or more Forms W-2 must file Forms W-2 and MO-W-3, Transmittal of Tax Statements, electronically. Filing on magnetic media is not allowed for these employers. Note also that the deadline for filing calendar year 2019 Forms W-2 by these employers is January 31, 2020.

Employers filing fewer than 250 Forms W-2 for calendar year 2019 may file electronically or on paper, CD or flash drive. The deadline for these employers to file electronically, or on paper or magnetic media, is February 28, 2020.

Employers failing to file using the correct method (i.e., electronically for those with 250 or more employees) or by the due date, unless an extension of time is given or it is shown that such failure is due to reasonable cause, may incur a penalty of $2 per W-2 not filed correctly or timely, not to exceed $1,000.

For more information, call +1 573 751 8150 and see the 2019 Missouri employer reporting of W-2s instructions and specifications handbook and the 2020 Missouri employer's tax guide. See also the Department's FAQs on Form W-2 filing.

For more information on Missouri withholding tax, see the Department's website.

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Contact Information
For additional information concerning this Alert, please contact:
 
Workforce Tax Services - Employment Tax Advisory Services
   • Kenneth Hausser (kenneth.hausser@ey.com)
   • Debera Salam (debera.salam@ey.com)
   • Kristie Lowery (kristie.lowery@ey.com)

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