US IRS Income Tax Withholding
On Feb. 13, US IRS proposed income tax withholding regulations.
- Proposed Internal Revenue Service regulations provide guidance for employers concerning the amount of federal income tax to withhold from employee's wages.
- IRS updated employment tax regulations under 26 CFR 31 as to 26 USC 3401 and 3402 to conform to the changes made by Tax Cuts and Jobs Act (TCJA).
- Accommodate redesigned 2020 Form W-4 employee's withholding certificate and related wage withholding tables and computational procedures established by the IRS.
- Proposal Purpose
- Revised regulations implemented by the recent IRC changes made by the TCJA.
- Proposed rules reflected redesigned 2020 Form W-4 and related IRS publications.
- Proposed regulations affect employers that pay wages subject to federal income tax withholding, employees who receive wages subject to federal income tax withholding.
- Proposed Regulations
- Clarified that, relating to the collection of income tax at source, any reference to withholding exemption certificates also means withholding allowance certificates.
- Rules clarified employers that use percentage method of withholding must compute tax amount to be withheld based on entry for anticipated filing status, marital status.
- On employee's Form W-4 using applicable percentage method tables, computational procedures in applicable forms, guidance for period in which wages are paid.
- Employers using wage bracket method withholding tables for daily, miscellaneous pay period must use wage bracket withholding tables for employee's filing, marital status.
- Provided that employee who fails to furnish valid Form W-4 must be treated as single.
- Changed current regulations that employee's anticipated filing status on employee's income tax return does not determine if employee indicate married on Form W-4.
- In defining married, in addition to employee marital status, tax amount withheld also determined by reference to employee anticipated filing status on income tax return.
- May only select married filing jointly on form if reasonably expects to file jointly single return of income, is lawfully married for federal tax purposes, treated as married.
- Similar to current regulations, employee is entitled to withholding allowance only if employee furnishes a valid Form W-4 claiming withholding allowance.
- Employer not required to ascertain whether the withholding allowance the employee claims is greater than the allowance to which the employee is entitled.
- Written comments and public hearing requests must be received by Apr. 13, 2020.
- Except for removal of S 31.3402(h)(4)-1(b), proposed regulations provide that taxpayers may choose to apply the rules on or after Jan. 1, 2020.
||85 FR 8344, 2/13/2020; RIN 1545-B032; 26 CFR 31; Tax Cuts and Jobs Act; 26 USC 3401; 26 USC 3402; Form W-4
||Accounting; HR; Legal; Operations; Reporting; Tax
||United States of America
|Reg. Last Update
Last substantive update on 02/14/2020