What Does Tax Reform Mean for W-4s?
While ardent followers of tax reform have focused on such key issues such as pass-through entities, state and local deductions, AMT and foreign repatriation rates, there’s another looming issue—albeit less impactful on pocketbooks—that has not grabbed the headlines: W-4s. Tax reform will eliminate taxpayer exemptions for individuals, spouses and their children. As such, employees would need to submit new W-4s to their employers for signature.
Because tax reform will be effective in 2018, taxpayers will continue to use the current tax law for their 2017 filings.
The IRS expects to have the new withholding tables and allowance amounts by February 2018. However, employers and payroll companies will have to undertake major logistics and communications efforts to get new W-4s signed by employees.