Starting on January 1, 2020, every new employee and/or existing employee wishing to make federal tax withholding changes will be required to use a brand new Form W-4. Here’s why an update from legacy payroll to Sage 100 Payroll 2.0 is likely required.
Why Did Form W-4 Change?
The revised form implements changes made following the 2017 Tax Cuts and Jobs Act, which implemented major revisions affecting taxpayer withholding.
The redesigned Form W-4 no longer uses the concept of withholding allowances, which was previously tied to the amount of the personal exemption. Due to changes in the law, personal exemptions are no longer a central feature of the tax code.
According to the IRS, the new form uses the same underlying information as the old design, but replaces complicated worksheets with more straightforward questions that make accurate withholding easier.
The redesigned Form W-4 no longer uses the concept of withholding allowances, which was previously tied to the amount of the personal exemption. Due to changes in the law, personal exemptions are no longer a central feature of the tax code.
According to the IRS, the new form uses the same underlying information as the old design, but replaces complicated worksheets with more straightforward questions that make accurate withholding easier.
What You Need to Know
Two important aspects of the new requirements include:
- Any new employee starting January 1, 2020 or later must use the new Form W-4.
- Effective January 1, 2020 any employee that needs to make changes to their withholdings must use the new Form W-4 Employee Withholding Certificate.
What It Means for Sage 100 Payroll
In order to comply with these changes, customers must be on Sage 100 Payroll 2.0 (Version 2018 or higher). Sage 100 Version 2017 and earlier will not support the additional fields necessary to correctly calculate federal withholding taxes within the system.
If you’re already using Sage 100 2018 or 2019, simply install Payroll 2.20.0 which was released mid-December 2019. If you’re running Sage 100 2017, an update is required in order to avoid having to perform manual tax calculations with each check run. If your upgrade is not complete before January 1, 2020, you can still run payroll but the federal withholding for your employees will not be calculated accurately by the system and would need to be corrected manually.
Note: Sage 100 Payroll 2.0 is a separate install from the core Sage 100 2018 or 2019 modules.
If you’re already using Sage 100 2018 or 2019, simply install Payroll 2.20.0 which was released mid-December 2019. If you’re running Sage 100 2017, an update is required in order to avoid having to perform manual tax calculations with each check run. If your upgrade is not complete before January 1, 2020, you can still run payroll but the federal withholding for your employees will not be calculated accurately by the system and would need to be corrected manually.
Note: Sage 100 Payroll 2.0 is a separate install from the core Sage 100 2018 or 2019 modules.
