WS:07:08: 2020 W-4 Information and Set Up (Doc ID 2615506.1)

Last updated on JANUARY 08, 2021

Applies to:

Details

 The 2020 United States Federal W-4 announcement

 What is changing?

• The US Internal Revenue Service has issued a draft of the 2020 W-4. The form changes are intended to withhold a close approximation of the annual federal income tax due on the form 1040.
• This final approved 2020 W-4 is due late in November 2019, however, the IRS is not expecting any significant changes.

Notify employees:

Currently, the IRS has not made the 2020 W-4 as mandatory for all employees.  Therefore, for existing employees, it is recommended, for accurate tax withholding, to update the W-4 on or after December 23, 2019, but it is not required.  For new hires, it is required to use the new W-4.

Filing Status Values Prior to 2019 and prior vs 2020

How to set up the new W-4 for the employee? 

After you have installed both the Vertex 4.3.3 and SU update above from JDE, you can now set up the new W-4 for the employee.

1.  From menu G81 take Versions List option (98300). Inquire on Form ID P060120A.  Place a 1 in the O column to exit to the Processing Options Revisions.  Verify that it contains the correct year, in this case 2020.  If the year is blank or 0000, change it to 2020. Note: the year must be in 4 digit format.

2. From the menu, G0711 take the Employee Entry option (060101). Inquire on the employee then locate the Mart Stat(F/S/L) field.  Make a change to the federal filing status (first field). This is step 1 on the W-4 form.

3.  From the menu, G0711 take the Tax Withholding/Overrides option (060120). Inquire on the employee then press F5 to Employee's Withholding Certificate (060120A).  (old name Employee’s Withholding Allowance Certificate).  Fill out this form according to step 2-4  of the new W-4 that employee turned in. Please note:step 5 on the W-4 form is not on the P060120A as it is for employee signature.  Press enter when done.   When payroll is run or interim is created, the Federal filling status from step 2 above along with any values on the Employee's Withholding Certificate (060120A) will be passed to Vertex to retrieve the Federal income tax for the employee.

Q1: Are current employees who are active in 2019 required to complete a 2020 W-4?

A1: No. The IRS does not require the 2020 W-4 yet, but strongly recommends that employees file one. The IRS has provided updated withholding tables that will be used to calculate the new 2020 form and forms prior to 2020.

Q2: If employees do not update the W-4 in 2020, will the tax differences be noticeable when form 1040 is filed?

A2: Yes. The new W-4 form is designed to reduce the difference between the annual amount withheld and the 1040 tax calculation.

Q3: If an existing employee does not file a new W-4, will Federal income tax still calculate based on the existing filling status?

A3: Yes.  The system will use the old W-4 to calculate Federal income tax.

Q4. How do you manually calculate Federal income tax?

A4. Refer to IRS publication 15t for the worksheet on how to manually calculate the federal income tax https://www.irs.gov/pub/irs-dft/p15t--dft.pdf

Q5. What if the employee didn't want any Federal income (exempt) calculate.  How to override the exempt for the employee?

A5.

1.  If the employee is using the old W-4 (2019 or prior), to override the employee federal exemption, you can continue to use code 99 under the W/H Exm field.

2. If the employee is using the new 2020 and forward W-4, the user must enter a flat dollar in the  Employee's Withholding Cert (F5 from employee tax withholding and override screen) under the field "Add the amounts above and enter the total here" to stop the Federal income tax from calculating.  The reason is that the new W-4 no longer work with the number of exemption but instead the actual flat dollars.  The larger the flat dollars claimed, the less  likely the Federal income will be calculated.

Q6. How to resolve 0781-invalid year error when trying to access the Employee Withholding Certificate (P060120A)?

A6. From menu G81 take Versions List option (98300). Inquire on Form ID P060120A.  Place a 1 in the O column to exit to the Processing Options Revisions.  Verify that it contains the correct year, in this case 2020.  If the year is blank or 0000, change it to 2020. Note: the year must be in 4 digit format.

Actions

Obtain the new functionality by applying the required Vertex release and the Software Update (SU) for the release listed below.

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