The IRS released the 2020 Publication 15-T, Federal Income Tax Withholding Methods, which describes how to figure withholding using the Percentage Method and the Wage Bracket Method and also describes alternative methods for figuring withholding. The publication explains how to withhold income tax based on pre-2020 Forms W-4 and 2020 Forms W-4, Employee’s Withholding Certificate.
Worksheets and Withholding Tables
Adjustments for an employer to figure withholding based on Forms W-4 submitted in 2020 and forms submitted in an earlier year are described in more detail in the various worksheets. There are tables for three filing statuses: married filing jointly, single, and head of household. The head of household tables should not be used if the Form W-4 was from before 2020. There are also five worksheets. Employers that have an automated payroll system will use Worksheet 1 and the corresponding Percentage Method tables to figure withholding.
Withholding Adjustment for Nonresident Aliens
Publication 15-T provides the amounts that employers should add to the wages paid to nonresident alien employees working in the United States when figuring their income tax withholding.
APA Resources
In-depth coverage of Publication 15-T, with examples of income tax withholding calculations, will be featured in the January issue of Payroll Currently. An overview of the redesigned 2020 Form W-4 and the 2020 Publication 15-T are provided in APA’s Webinar on Demand: Avoid 2020 Form W-4 Anxiety and Disruption of Your Payroll Department. APA also has a Compliance Hot Topic about the 2020 Form W-4, which contains APA resources, IRS resources, and education links. APA resources include a sample letter for employers, tools to understand the new form, and links to Payroll Currently and Inside Washington articles.
To learn more about federal and state laws, regulations, and information to keep your company's payroll operations in compliance, check out Payroll Source Plus!
Jyme Mariani, Esq., is Managing Editor of Payroll Currently and Payroll Information Resources for the APA.