IRS issues interim W-4 guidance for 2018

If, thanks to tax reform, you can’t get your hands on 2018 W-4 forms, what are you supposed to do? Don’t worry. The IRS has issued interim guidance on W-4s that will apply until 30 days after the 2018 W-4 is released, whenever that will be.

2017 W-4s are OK

New hires must file W-4s with you by their first day of work. For now, they may use 2017 forms.

Likewise, employees who will be using the IRS’ calculator and desire to change their withholding can furnish you with 2017 forms.

Employees don’t have to refile with you once the IRS releases the 2018 form.

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Exemption from income tax withholding

The general rule is that employees who claim an exemption from income tax withholding must refile their W-4s with you every year by Feb. 15 to continue to exemption. If they don’t refile, you withhold using single/zero status, beginning on Feb. 16, until they provide you with a new form.

The IRS says that these employees now have until Feb. 28 to refile to continue their exemption this year. In addition, any employee who wishes to claim the exemption this year may use the 2017 form, provided you make one of the following optional modifications to the form:

  • Strike “2017” in the text on Line 7 and write “2018” in its place
  • Enter “Exempt 2018” on Line 7
  • Use the 2017 W-4 without any modification, but you must establish a procedure that requires employees to certify to you that they incurred no tax liability last year and anticipate incurring no tax liability this year
  • Any method that’s similar to the foregoing options, provided employees clearly convey, in writing, their intent to certify that they are exempt from withholding this year.

Warning: If you use the third or fourth option, you must clearly identify 2017 forms employees used last year and 2017 forms that they use this year to claim the exemption.

If employees file their W-4s electronically, you must make similar alterations to your electronic system.

Changes in family status

Normally, employees must refile their W-4s with you if they experience a change in family status that decreases the number of withholding allowances they can claim (e.g., the divorce).

Break: The IRS is suspending this requirement until 30 days after the IRS releases the 2018 W-4.