The IRS has released the 2023 Publication 15-T, Federal Income Tax Withholding Methods. The publication describes how to figure federal income tax withholding using the percentage and wage bracket methods and describes alternative methods for figuring withholding. The publication explains how to withhold income tax based on pre-2020 Forms W-4 and 2020 or later Forms W-4.
The 2023 Form W-4, Employee’s Withholding Certificate, was released with a few changes and no longer contains directions to use the tax withholding estimator to calculate withholdings.
Withholding on Periodic Payments of Pensions, Annuities
Form W-4P, Withholding Certificate for Periodic Pension or Annuity Payments, was redesigned for 2022 and a new form W-4R, Withholding Certificate for Nonperiodic Payments and Eligible Rollover Distributions, was created. While the forms were available for use in 2022, the IRS postponed the requirement to begin using them until January 1, 2023. Publication 15-T explains how to withhold based on pre-2022 Forms W-4P and 2022 or later Forms W-4P.
The 2023 Form W-4R was released with no substantial changes. A draft 2023 Form W-4P has been released but has not yet been finalized.
Withholding Adjustment for Nonresident Aliens
Publication 15-T also provides the amounts employers should add to the wages paid to nonresident alien employees working in the United States when figuring their income tax withholding.
Publication 15 (Circular E)
The IRS also released the 2023 Circular E, Employer’s Tax Guide (Publication 15), which explains the requirements for withholding, depositing, reporting, paying, and correcting employment taxes.
For more information, see the APA Compliance Update, 2023 Publications 15 (Circular E),15-T, and Forms W-4, W-4R Released. Compliance updates are emailed to APA members and are also available on the Compliance Updates webpage.
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!
Rayna Alexander, Esq., is Editor of Payroll Information Resources for the APA.
