New W-4 form brings changes for federal withholding choices

W-2 availability

Payroll staff are working on W-2 and 1095 documents, running tests and audits to make sure results are accurate following the midyear transition to Workday. W-2s should be available next week.

New hires and current employees making changes to their federal income tax withholding elections have encountered an unfamiliar sight since Jan. 1, as the Internal Revenue Service overhauled its longstanding W-4 form. The new document is more detailed.

Under the old system for determining how much is deducted from a paycheck for federal income tax, employees declared their marital status and a certain number of allowances. More allowances meant less withheld, as did indicating "married" status. That information aligned with a withholding table matrix that dictated how much was withheld. Withholding is used to pay federal income taxes due each year in April. If too much is withheld, a taxpayer gets a refund. If too little is withheld, they must pay the IRS the difference.  

As of Jan. 1, employees still list their tax-filing marital status, but the revamped method scraps allowances. The more specific form asks about dependents that may qualify for the child tax credit, other household income and expected itemized deductions.

"It's almost a mini-exercise in doing your actual tax return," said Tim Ashley, interim assistant vice president for payroll, benefits and tax.

The change by the IRS, which applies to all U.S. payroll, was prompted by surprises in the wake of the federal tax cuts and job act that took effect in 2018. New regulations, deductions and credits brought unexpected bills or refunds for some taxpayers.

The modified W-4 aims to level out those swings, matching withholding more closely with how much tax an employee will owe. The more information provided, the more accurate the deductions should be. Providing details is optional, though. Marital status for tax-filing purposes is the only information employees are required to offer, Ashley said.

The new W-4 doesn't impact current employees who want to keep their withholding as it is. Their federal deduction rate will hold steady if they take no action, and no changes are required. But if employees want to alter their withholding, they'll use the new form and should be sure to monitor the effects, Ashley said.

"I'd highly recommend that they watch their paycheck closely to make sure they're ending up with the result they intended," he said.

Changes to W-4 withholding elections are made in Workday. Click on the "Pay" icon on the home screen and then "Withholding Elections" to update state and federal choices. The new federal form doesn't impact Iowa's version of the W-4, which still is based on allowances and marital status.  

In the coming weeks, the payroll office will publish a job aid that helps explain the W-4 and provides tips, Ashley said. Payroll staff also are available for individual questions or departmental presentations about the new W-4. Questions and presentation requests can be submitted to