More from: determine the right amount of federal income tax to withhold

IRS Withholding rules changing effective Jan 2020

The IRS is changing the withholding calculations and they no long involve “allowances” (ex: Married 2 or Single 0 no longer applies) and an Excel spreadsheet / macro calculator is provided by IRS to correctly withhold starting January 2020. Links and part of the IRS email blast from IRS Newswire <irs@service.govdelivery.com> follow.

We posted information from Circular E earlier this year, and the changes to IRS Form W-4 were alluded to in May 2019. The link to the current (Nov 4) draft of the Publication 15T document is https://www.irs.gov/pub/irs-dft/p15t–dft.pdf. The link to the new W-4 for 2020 is https://www.irs.gov/pub/irs-pdf/fw4.pdf. The link to the Excel Spreadsheet “Income Tax Withholding Assistant for Employers” calculator web page is https://www.irs.gov/businesses/small-businesses-self-employed/income-tax-withholding-assistant-for-employers. The related announcement is at https://www.irs.gov/newsroom/new-downloadable-assistant-helps-small-businesses-withhold-the-right-amount-of-income-tax.

The percentage method withholding tables for automated (example, Quick Books) are at https://www.irs.gov/forms-pubs/2020-percentage-method-tables-for-automated-payroll-systems


New downloadable assistant helps small businesses withhold the right amount of income tax

WASHINGTON — The Internal Revenue Service has launched a new online assistant designed to help employers, especially small businesses, easily determine the right amount of federal income tax to withhold from their workers’ pay.

Known as the Income Tax Withholding Assistant for Employers, this new spreadsheet-based tool is designed to help employers easily transition to the redesigned withholding system (no longer based on withholding allowances), which goes into effect on Jan. 1. It does this by helping them easily implement new income-tax withholding requests from employees who fill out the completely redesigned 2020 Form W-4, Employee’s Withholding Certificate.

At the same time, the tool can also help employers continue to properly withhold from employees who still have a withholding request on file using a past version of the W-4, which was based on withholding allowances. The employer can save a separate customized copy of the file for each employee containing that employee’s Form W-4 information.

Now available for download, without charge, on IRS.gov, the Income Tax Withholding Assistant for Employers is designed to help any employer who would otherwise figure withholding, manually, using a worksheet and either the percentage method or wage bracket tables found in Publication 15-T, Federal Income Tax Withholding Methods.