The Tax Cuts and Jobs Act (the “Tax Act”) significantly changed the federal income tax rules. Several of these changes impact income tax withholding, including changes to the tax rates and brackets, increasing the standard deduction, and eliminating personal exemptions.
Normally, employees must provide their employers with an updated Form W-4 within 10 days of a change in their personal circumstances that affects their withholding. However, the IRS in Notice 2018-92 gave employees a temporary reprieve from this 10-day rule when their withholding changed solely as a result of the Tax Act. In these circumstances, employees must update their Form W-4 within 10 days of April 30, 2019 – or by May 10, 2019.
With the 2018, individual tax filing season in the rearview mirror, now is a great time to remind employees about the requirement to update their Form W-4 and to encourage them to take advantage of the IRS withholding calculator to determine if updates are needed. The IRS withholding calculator is available here.