On November 26, the IRS issued early release copies of the 2020 percentage method tables for automated payroll systems that will appear in Publication 15-T (Federal Income Tax Withholding Methods).
The Form W-4 (Employee’s Withholding Certificate) needed an overhaul due to the numerous changes required by the enactment of the Tax Cuts and Jobs Act in late-December 2017. This overhaul will take effect with the release of the 2020 Form W-4. To help employers and payroll providers calculate federal income tax withholding, as a result of the redesign of the 2020 Form W-4, new Publication 15-T was created.
During the November 7 IRS payroll industry conference call, it was explained that the IRS is no longer issuing Notice 1036 (Early Release Copies of the Percentage Method Tables for Income Tax Withholding). Instead, the IRS is posting these tables on its website.
The early release copies of the 2020 percentage method tables include standard withholding rate schedules to be used if the Form W-4 is from 2019 or earlier, or if the Form W-4 is from 2020 or later and the box in Step 2 is not checked.
Step 2 of the 2020 Form W-4 has to do with multiple jobs or if the spouse works and should be completed if the employee holds more than one job at a time or is married filing jointly and the employee’s spouse also works.
The early release 2020 percentage tables also include withholding rate schedules to be used if the Form W-4 is from 2020 or later and the box in Step 2 is checked.
The IRS plans to issue the 2020 Form W-4 by the end of November and the 2020 Publication 15-T in December.