December 27, 2017

Existing Employee Withholding Allowances to Be Used in New 2018 Guidance

The 2017 Forms W-4 that employees already have filed may be used by employers in conjunction with the new tax law based on upcoming guidance from the Internal Revenue Service, the agency said Dec. 26. “The IRS emphasizes this information will be designed to work with the existing Forms W-4 that employees have already filed, and no further action by taxpayers is needed at this time,” the agency said in an email.

Forms W-4, Employee's Withholding Allowance Certificate, are completed by employees to inform employers of marital status and the number of withholding allowances to be claimed for federal income tax purposes. In 2017, a withholding allowance is the equivalent of the single personal exemption of $4,050.

Under the tax law signed Dec. 22 by President Donald Trump, personal exemptions are to be suspended from 2018 until the end of 2025, a move that would require the IRS to update the W-4. Until the IRS releases initial guidance on 2018 percentage method income tax withholding brackets, expected by January, “employers and payroll service providers should continue to use the existing 2017 withholding tables and systems,” the agency said. Those implementing changes based on new guidance would be encouraged to do so by February, it said.

After new withholding guidance is released, possibly in mid-January, it will take two to six weeks for payroll to implement the changes that would appear on employee paychecks.

Reproduced with permission from Late-Breaking Payroll News 195 PYBN (Dec. 26, 2017). Copyright 2017 by The Bureau of National Affairs, Inc. (800-372-1033) <>.