Why You Should Encourage Employees to Review W-4 Withholdings
Big changes were expected this year to the W-4 form—officially called the Employee’s Withholding Allowance Certificate—to better reflect the tax changes in the now-year-old Tax Cuts and Jobs Act. But last summer, the IRS announced these changes would be put off until 2020. There is a new W-4 form for 2019, which looks an awful lot like the 2018 version but does include a small adjustment for inflation.
Employers were required to start using new Federal Tax Withholding Tables to calculate withholding amounts in paychecks last February, but that’s about where employer requirements related to the W-4 end. After that, it’s really up to employees to take the initiative to review their withholdings and file new W-4s with their employers if they want to make any adjustments.
Most of your employees probably filed new W-4s last year, in response to pleas from financial experts to avoid giving Uncle Sam an interest-free loan. But it’s never a bad idea to remind them that they can complete a new Form W-4 each year and whenever their personal or financial situation changes.
Employers don’t have to encourage employees to review their withholding amounts and they don’t have to put out a call for new W-4s every year—but maybe they should. Steps like these, while completely optional, help show employees that you care.
When you take the time for such leadership communication, even when it’s not mandated by the government, employees take notice. They appreciate your looking out for their best interests. They feel valued. And when employees know that you care about them, they’re more likely to stick around.
So, if you want to do the right thing, but don’t have much time to do it, we’ve made it easy for you. Just copy and paste the following into an email to all employees.
Send This Email to Your Employees
Subject: New Year Means It’s Time to Review Your Withholdings
Body: The IRS says taxpayers should consider completing a new W-4 form each year and when your personal or financial situation changes. I encourage you to take a few minutes and review your tax withholdings. It’s not required, but the IRS recommends that taxpayers consider doing this—and completing a new W-4 form—each year and when your personal or financial situation changes.
There’s an easy-to-use withholding calculator available at IRS.gov, which can help you determine your withholdings under the current tax law. You can also check with your accountant or tax advisor on whether you need to make adjustments to your withholdings in light of life events like marriage, having children or taking on a second job.
The goal is to avoid under-withholding (which means you would owe Uncle Sam money on April 15, 2020) or over-withholding (which means you would be due a refund). Instead, you want to get as close to the correct amount as possible.
If you decide you want to adjust your withholdings, you’ll need to give us a new Form W-4. You can do this at any point during the year, and the change will generally be reflected in your next paycheck.
Here are some links that may help you determine your withholdings:
[Insert your name here]