The IRS published Notice 2018-14 to provide more guidance on withholding rules that were changed by the Tax Cuts and Jobs Act. The notice includes:
- Extension of the use of the existing 2017 Form W-4 (Employee’s Withholding Allowance Certificate) to claim exemption from withholding for 2018 until the IRS releases its new 2018 Form W-4;
- Suspension of the Sec. 3402(f)(2)(B) rule that employees must notify employers within 10 days of changes in status that affect their withholding;
- Offers the new rate of optional withholding on supplemental wages as 22%, down from 25%;
- Changes the rule that withholding on periodic payments (such as for pensions and annuities) under Sec. 3405(a)(4) when no withholding certificate is in effect will be based on treating the payee as married and claiming three withholding allowances. This is because the new federal tax law no longer provides personal exemptions.