New federal W4 forms for our temporary employees

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In response to the new federal income tax reform signed by President Trump in December, the Department of the Treasury has issued a new federal form for employee withholding allowances (W4). Our active Frank’s temporaries may request a new form by email or in person.

Highlights from the new W4 form:

Line 5 of the form asks the “total number of allowances” you’re claiming. Very similar to the old form!

  • As with the older federal W4 form, the number of allowances you’re claiming for withholding from your payroll check may be different from the number of personal exemptions you claim when you file your income tax.
    • Under previous federal tax law, many employees thought of the number of allowances claimed on the W4 as identical or similar to the number of personal exemptions they claimed on the 1040 form.
    • The new income tax law eliminated these personal exemptions, raising the standard deduction.
    • So starting with tax year 2018, the number of allowances you’re claiming for payroll withholding will no longer correspond to a number of personal exemptions when you file your income tax returns in 2019. But for most of us, it’s still a helpful way to think about it!
  • As with the older federal W4 form, claiming zero or fewer allowances means that more will be withheld from your payroll for federal income tax. Claiming more allowances means that less will be withheld.

Line 6 of the form identifies any “additional amount” (in dollars) you want withheld from each paycheck. Very similar to the old form!

  • As with earlier forms, this additional dollar amount withheld is factored after the number of allowances you’re claiming.
  • As with earlier forms, this exact dollar amount is withheld no matter how big – or small – your paycheck is.

Line 7 of the form relates to claiming exemption from payroll withholding for federal taxes. Again, very similar to the old form!

  • Being “exempt” from payroll withholding doesn’t mean that you received a refund of some of your tax withheld when you filed your income tax return.
  • Claiming “exemption” means that you “had a right to a refund of ALL federal income tax withheld” for 2017. It also means that you expect to have a right to a refund of ALL federal income tax withheld in the current year. This usually means that your household has extremely low annual income.

W4 Worksheets:

Page 3 of the IRS form offers a “Personal Allowances Worksheet.” This is for your use and records as you calculate how much to have withheld from your paycheck. It helps you to factor in child tax credit, credit for other dependents, and possible itemized deductions such as charitable contributions.

Page 4 of the IRS form offers a “Two-Earners / Multiple Jobs Worksheet.” Like the Personal Allowances Worksheet, it helps you to evaluate tax withholding for each employee if you have two (or more) people in your household who have paying jobs. It also helps you to calculate tax withholding if you are the sole person in your household, but are working more than one paying job.

Summary:

You are not required to complete and file a new W-4 form with your current employer(s). Even so, you may still want to review your federal allowances and complete those worksheets to be sure you’re comfortable with the amount being withheld from your 2018 payroll checks.

As a reminder, this is my understanding of these forms! I’m NOT a CPA or a tax consultant. Please be sure to discuss these changes with your income tax professional.

If you’re an active Frank’s temporary, you’re welcome to contact us for these forms!

by Elyse Williamson
Google

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