As new withholding looms, IRS launches tool to help small biz

A new online “assistant” from the IRS helps employers determine the right amount of federal income tax to withhold from workers’ pay.

The spreadsheet-based “Income Tax Withholding Assistant for Employers” helps navigate the redesigned withholding system (no longer based on withholding allowances) that goes into effect Jan. 1 for employees who fill out the redesigned W-4.

2020 W-4 .jpg

The assistant is designed to help employers who would figure withholding manually using a worksheet and either the percentage method or the wage bracket tables in Publication 15-T, “Federal Income Tax Withholding Methods.” The tool creates a profile for each employee and calculates federal income tax withholding. The tool can also help employers withhold from employees who still have a request on file using a past W-4.

Employers who already use an automated payroll system won’t need the assistant.