IRS offers preview of withholding guidance for employers

The Internal Revenue Service posted a special early draft of its publication on federal income tax withholding to give employers an advance look at the changes in the new Form W-4 that is being revised for 2017 tax law.

Timothy Fadek/Bloomberg

Publication 15-T, Federal Income Tax Withholding Methods, will be for use next year and will contain all the federal income tax withholding tables. The IRS released the draft publication last Thursday to provide employers a better sense of the computation of withholding to be made under the Percentage Method and Wage Bracket Method tables using both the new 2020 Form W-4 and the Forms W-4 from before 2020.

Late last month, the IRS also released a new draft version of the Form W-4 employer withholding allowance certificate that will be used next year (see IRS unveils second draft W-4). It incorporated some changes that tax professionals had asked for after the original draft provoked criticism last year. Another draft of the Form W-4 is expected to be released this summer before the form is finalized.

The IRS said it is providing the draft of the Publication 15-T for information, review and feedback. “The way employers will figure federal income tax withholding for 2020 Form W-4, 'Employee’s Withholding Allowance Certificate,' is changing to match the changes to the new form,” said the IRS. “This special draft release of new Pub. 15-T contains a first look at the new employer steps to figure federal income tax withholding. The calculation of withholding for Form W-4 submitted prior to 2020 is unchanged from prior years, but this publication describes how to compute withholding for 2020 and earlier Forms W-4 as one procedure. ... Beginning with the 2020 Form W-4, employees will no longer be able to request adjustments to their withholding using withholding allowances. Instead, using the new Form W-4, employees will provide employers with amounts to increase or reduce taxes and amounts to increase or decrease the amount of wage income subject to income tax withholding.”

Interested parties are asked to submit comments on the publication by July 8, 2019. Because of the volume of responses it expects, the IRS will not be responding to all the comments it receives.

For the latest on the employer instructions, see IRS.gov/Pub15T and for the latest information on the Form W-4, visit IRS.gov/W4.