When your colleague asks you “what’s new?” oftentimes you answer, “nothing much.” That never seems to be the case when you are managing employees and payroll. Year after year, not only do you have to pay attention to rate changes, new thresholds, wage bases, deadlines, and more, but you also have to learn brand new laws and processes! That certainly was the case when the Affordable Care Act was introduced.

So, we decided to call your attention to “what’s new for year-end 2019.”  This way, you can get ahead of new processes before it’s too late or, at a minimum, before it’s no longer new anymore.

1. 2020 Federal Form W-4

At the end of 2017, Congress passed the Tax Cuts and Jobs Act (TCJA), calling for – among many other things – the revision of the Federal tax withholding system. The goal was to more accurately estimate withholding throughout the year so that employees end up with smaller refunds and larger net paychecks – effectively stimulating the economy by putting more spending money into the hands of taxpayers. Since the law was enacted on December 22, 2017, it was too late for the IRS to implement withholding change for 2018, and they set their sights on 2019. But, due to the complexity of the law, the IRS delayed regulatory action until 2020.

And this year, they’ve been very busy preparing – starting with inviting Viventium and other stakeholders to participate in a contracted study. They released the final 2020 Form W-4 on December 5 of this year, along with the final 2020 withholding tables.  The second daft of Publication 15-T  was issued on August 8, and on September 3, the IRS released a draft Form W-4(SP), which can be given to Spanish speaking employees.

Upcoming milestones announced by the IRS:

• A final Publication 15-T with actual withholding tables also near year-end.
• Form W-4P for withholding from pension and annuities.

What’s Going to Change:

To meet the TCJA’s goal of more accurate withholding, the IRS is collecting more information on the face of the W-4. The following data items are new on the form.

Mandatory Items:

1. No more allowances. The concept of withholding allowances, such as Married-3, Single-2, is passé. This corresponds to the new personal tax return (Form 1040), which no longer uses personal or dependent exemptions.
2. Three filing statuses. Head of Household is new as, until now, it was just Single and Married.

Bottom of Form

To learn more about the new Federal Withholding and Form W-4, check out our blog on the topic here.

2. The DOL’s Final Overtime Rule

If the sweeping overhaul of the federal withholding system wasn’t enough, get ready for another 2020 change that is expected to affect 1.3 million workers.

After a failed attempt in 2016, the U.S. Department of Labor finalized its new overtime rule back in September 2019. Effective January 1, 2020, the minimum salary threshold for an employee to be exempt from overtime will rise from $455 per week ($23,660 annually) to $684 per week ($35,568 annually). Employers will have to pay close attention to their exempt employees who currently fall between the old salary threshold and the new. If an employer has employees in this range for whom hours are not being tracked and overtime is not being paid, it’s time to get to work. Either the employee must be reclassified as non-exempt and be paid overtime, or his/her salary must be increased to meet the new $684 threshold. Check out our FAQ on the new DOL overtime rule for more on this far-reaching change.

3. ACA Filing is Coming to the State Level

Several states are jumping on the Affordable Care Act (ACA) bandwagon and enforcing their own individual mandate for 2019.

Effective January 1, 2019, taxpayers in both New Jersey and the District of Columbia are required to maintain minimum essential coverage or potentially pay a penalty. In order to help enforce this requirement, New Jersey and DC employers are now required to submit 1095-C information for all NJ and DC residents. The 2019 New Jersey filing is due March 31, 2020, and the DC filing is due June 30, 2020.

NJ and DC are not the first states to implement health care reporting. Massachusetts implemented its own filing back in 2018. However, now it looks like an increasing number of states are instituting their own filings. California and Rhode Island are already slated for 2020.

Find out more about these state requirements below:

• Massachusetts
• New Jersey
• District of Columbia

So, the next time a colleague asks you “what’s new?” you can answer with confidence, “federal withholding, overtime, and state health care reporting, care for me to explain?” I can say with confidence they will never ask you “what’s new?” again.