January 22, 2020
Georgia 2020 state income tax withholding guide available; Form G-4 update
The Georgia Department of Revenue has released its 2020 employer withholding tax guide, which contains the income tax withholding wage-bracket and percentage method tables that are effective with wages paid on and after January 1, 2020. The 2020 percentage method tables, standard deductions and personal allowances are unchanged from 2019.
As we previously reported, the maximum Georgia income tax rate was temporarily reduced to 5.75% effective for tax year 2019, down from 6.0%. The Georgia state legislature will determine during its 2020 session whether to temporarily reduce the top income tax rate to 5.5% for 2020. (EY Payroll Newsflash Vol. 19, #069, 4-5-2018.)
Supplemental withholding rates for 2020
The supplemental withholding rates on bonuses and other supplemental compensation remain as follows (O.C.G.A. § 48-7-101(f) (5)):
If the annual income is, withhold at a rate of:
If the state legislature chooses to reduce the top rate to 5.5% for 2020, the top supplemental withholding rate should also be reduced to 5.5%.
2020 Form G-4
As we reported, the Department released an updated Form G-4, Georgia Employee’s Withholding Allowance Certificate, in early 2019.(EY Payroll Newsflash Vol. 20, #037, 2-26-2019.)
According to the form’s instructions, Georgia law (O.C.G.A. §48-7-102) requires employees to complete and submit Form G-4 to their employers to have the correct state income tax withheld. Failure to submit a completed Form G-4 will result in the employer withholding income tax as though the employee were single with zero allowances.
However, the 2020 Georgia employer tax guide (page 13) continues to state:“Employers can use the federal election to determine state income tax withholding if sufficient information is available to do so. Otherwise, employers should withhold as if the employee were single with zero allowances. O.C.G.A. § 48-7-102.”
Likewise, Georgia O.C.G.A. § 48-7-102 states:
(2)Except as otherwise provided by rules or regulations of the commissioner, if an employee has filed with his employer an exemption certificate as required for federal withholding tax purposes, an employer may give effect to the exemption status and exemptions claimed on the federal exemption certificate when the certificate contains sufficient information to enable the employer to give effect to the withholding exemptions allowable under this Code section.[Emphasis added.]
Due to revision to federal Form W-4 for 2020 removing federal withholding allowances, the federal form no longer provides sufficient information for determining Georgia withholding exemptions. Accordingly, Georgia employers should provide Form G-4 to employees hired in 2020, and current employees making changes to their withholding in 2020 and require that they submit the state Form G-4 in addition to federal Form W-4.
Employers must submit certain Forms G-4 to the Department
Employers are instructed to submit Forms G-4 claiming more than 14 allowances or exempt from withholding to the Department’s Withholding Tax Unit, 1800 Century Blvd. NE, Atlanta, Georgia 30345.
The Department will notify the employer if the Form G-4 should not be honored (otherwise, no reply will be issued). The employer should honor the employee’s G-4 claiming exempt from withholding or more than 14 allowances unless notified to not do so by the Department. Employers knowing that the Form G-4 is erroneous should not honor the form and should withhold as though the employee is single with zero allowances.
File calendar year 2019 Forms W-2 by January 31, 2020
Calendar year 2019 Forms W-2, along with the annual reconciliation return (Form G-1003) and Forms 1099 where Georgia income tax was withheld, must be filed with the Department by January 31, 2020.
Georgia employers that file and pay state withholding tax electronically, and those required to file Forms W-2 electronically with the Social Security Administration, must also file Forms W-2 electronically with the Georgia Department of Revenue.
For more information, see the Department’s website.
Legislation temporarily reduces corporate and individual income tax rates
As we previously reported, 2018 HB 918, temporarily reduces both the corporate and the highest individual income tax rates. Applicable to tax years beginning on or after January 1, 2019, the corporate income tax rate and the highest individual income tax rate decrease to 5.75% from 6%.(EY Payroll Newsflash Vol. 19, #069, 4-5-2018.)
Applicable to tax years beginning on or after January 1, 2020, the corporate and the highest individual income tax rates further decrease to 5.5%, if the 2020 legislature approves, and the governor signs, a joint resolution ratifying this additional rate reduction.
These reductions are temporary and will sunset on December 31, 2025. On January 1, 2026, the corporate and the highest individual income tax rates will revert back to the 6% rate — the rate in effect on the day before the law was enacted.
EY Payroll News Flash