Payroll Compliance Changes for Federal 2020 W-4 Form

The Highlights of the Tax Updates for R2020.1

• In the Maintain Employees window, the Withholding Info was significantly redesigned to accommodate the additional information required in order to make accurate calculations for Federal Income Taxes when running
• Accommodates the “Multiple Jobs” option on the W-4 Form for the higher Federal Income Tax computation
• Payroll Reports and Tax Forms compute Federal Income Tax using the new variables
• Sage 50 users must Upgrade to R2020.1 in order to use/apply the new W-4 fields. The prior releases will NOT have the ability to process taxes for the new W-4 fields.
• The Tax Update (expected to be delivered late December 2019) will contain the new formulas to accommodate the new tax rules, however, the old tax formulas will also continue to exist for prior release R2020.0.
• Limitations: Many States have previously used the Federal W-4 Form to determine the number of Allowances to compute State Income Tax and other State tax formulas. The expectation is that these States will issue their own version of the W-4 Form or wait until July 2020 and beyond to implement any required changes.

Final Notes

• Beginning in 2020, all new employees must use the redesigned form. Similarly, any employees hired prior to 2020 who wish to adjust their withholding must use the redesigned form.
• Employees hired after Jan 1, 2020 or existing employees that wish to change their exemptions must use the new form.
• Employers may optionally request but cannot require that existing employees complete a new W-4.
• Employees hired after 2019 that fail to submit a W-4 will be treated as a single filer with no other adjustments.

Note: Refer to the IRS FAQs in the additional information below.