Medlin Software, Dennis

Great question. The reason I might memorialize it, is because while (so far that I can see) not disallowed, it is highly unusual, and because I know enough to know the reason for such an entry is likely (could be legal, might be a horrible mistake) tax shifting. The reality is, employees do blame their employers when they have a due bill, and an "out there" W4 should raise an eyebrow, even when valid. Could be the record is simply that I asked the employee are you sure?, I don't know, because I am not the average employer. I suppose this falls into me seeing things from several sides, with my default being from my work side. I should remember to include which view I am coming from in my messages. (I have had a rash of owner/employees asking me how to change their federal allowances, since it is no longer needed or allowed in my software, and since many owner/employees fail to keep themselves separate, such as collecting a W4 from their employee self and giving it to their employer self. Thus, the discussion of the options - with no specific advice - on the new form is very up front for me at present.) So what I would tell am employers is directed only from the employer position. Accept valid forms only. From the overall view, a valid form can be "out there", yet still be valid, so an employer may want additional CYA either verbal or written, even if not required. The flaw or gap in withholding is an employee does not have to meet the same standard as SE with quarterly deposits. Employees are considered good if they have withheld and/or deposit, enough by the Q4 deposit deadline. In theory (all I will admit to) if an employee can provide a valid W4 which causes no WH, yet make an appropriate deposit by the Q4 deadline, they can do what others suggested, zero withholding, make their own deposits.

I think it was a very thought out decision, to make it tougher for people who should not be exempt from claiming such. Not saying I agree, as I am very much against the new implementation, where the former "manual notations make it VOID" process is replaced by directing some to make manual notations. I think the removal of the exempt box falls right in line with the removal of "advance" EIC. Fraud reduction. But, I nave found nothing which says someone cannot put 100k in the "deduction" box, to eliminate or lower their withholding. Unless someone comes along and claims such an entry would require it to be forwarded to the IRS, this is a better way to have zero withholding, as it does not require a new "exempt" form each year. Remember, employer no longer has to think about what the entries are, as long as the form is valid... If an employee tells me why they put in 100k in deductions, and it makes sense, I would probably memorialize the conversation in writing, signed by the employee, and let the employee be responsible for themselves.

I do not allow negative items in the W4 fields. If someone wants to lower WH, they can add to the deduction field. The employer does not have to give any thought as to whether or not a W$ is "reasonable", just that it is not invalid. There are online test programs where anyone can "run" a sample check with various parameters, should they want to get a specific outcome.

Ugh. Just venting that it is not my fault the IRS did away with allowances. Just got a nasty gram from a customer (owner/employee) who wrote me to ask why the %^*%^&(* could they not change their allowances to 20 like they do at the beginning of every year (to have no WH until later in the year). Have had several nice folks ask also, but they were employee requests on the old form, and they had not noticed there was a new form (despite several emails from me).

This is the "thing". Those we elect have now cut withholding to the smallest amount they can stomach (meaning what their pollsters/advisors say they can get away with) in a relatively (sadly) successful attempt to fool voters into believing they are the "one" who increased their income. It is, and has been for several administrations, a game of chicken, rather than any attempt at being accurate. The administration lost for TY 2018, proved by having to widen the under withholding limit to keep "regular" folks from the penalty. It is well past the point where the withholding process is accurate enough for even some. All should decide on a reasonable liability for the year, then d whatever it takes to get to that point, even if it means making deposits personally. Some employees even play the game right back at the PTB, with little or no WH until Q4, and during Q4, having enough WH or deposits to stay out of penalty...

The actual calculations did their "norm", adjust based on the number pulled out of some hat. The parameters allow the old W4 form, as well as the new. The new W4 form, while not specifically stated now (the original proposal, for 2019, was - shock - more clear) has "implied" allowances based on status. IMO, the IRS was stuck/capitulated/whatever. They did not have the impetus to create simple stand alone calculations, as they did not want to require new W4 forms, and they know there are other tax agencies (such as states) which rely on some part of the federal process (W4 form, "allowance" figures, etc.). While "it is what it is", making the process to claim exempt such that the employee must properly add a hand written notation (versus the old form which was any hand written notation invalidated the form).

I am aware of an S Corp which is also compliant, the shareholders make no decisions as to how the corp is run. This allows them to properly be non-employees...

If only those who have to follow the rules made the rules... we would put ourselves out of work because the rules would be simple enough for most to actually follow. If my tax prepare is unwilling to help me with a tax form (which the W4 is), then I would be looking for another preparer. But, that person is me, and I am not about to fire me, yet . The IRS tells employers to direct the employee to the IRS tools, so that advice is not wrong. Not really the best advice, but not wrong. I can see it now, and it has happened (Carnac speaking). Employer helps employee. Employee ends up owing. Employee gripes at preparer as to why they owe. They shop for another preparer, none who can magically make a refund out of a mess. Preparer then, rightly so, directs the employee to the employer, wo was giving tax advice. Still a Catch-22. Still, my lowly opinion, the preparer is the only accurate (if not proper) place to review stub(s) and W4 for proper withholding to meet whatever magic figure the employee and preparer come up with for the annual withholding. This has happened in my own extended family, surprise bill with tax return, and no one claims to be responsible. So, for employers, they already have direction to follow, give the suggested notices and suggested information the tax agencies provide. The IRS suggested notice is reasonably well done this time.

I very much appreciate this topic. I just finished a conversation with someone who has a PTIN, and was asking why we are no longer allowing our software to work with Windows XP. besides the obvious, I pointed out how they, as having a PTIN, falls under the security plan requirements mentioned here (which started in 1999!). I pointed out there was zero chance they could avoid liability when using a known outdated and insecure OS. (Funny how the suggested plans include things which are not actually secure, but then again, I should not be shocked.) The reality is, all with sensitive data should be using W10, an edition of W10 on a machine built for seamless bitlocker (or similar if one abhors MS security) use, and use reasonable pass phrases (not passwords!) or other reasonable login methods (face unlock on a surface pro seems reasonable, and works easy enough with a short hibernate setting <sleep is not secure>, and good human action of manual locking when stepping away from the machine). This has me pondering removing our built in password capability, since it is moot, and provides a false sense of "security".

Despite many messages warning of the change, and how to handle it, I am getting "panic" contacts today asking why federal allowances can no longer be edited in my software. As of Jan 1, any changes to W4 information must be made as a result of the new W4, which has no allowances on it... The first one was a person, really upset, as they have an employee (intuition tells me it is the person contacting me, the owner) and they want to change the allowances to a high figure to eliminate federal WH, as they have done at the beginning of each year. I had to point out that without a valid W4 (as of 1/1/20, the new form only) no changes could be made. The "but I have always just made the change" expected reply was offered, but eventually, they were able to grasp the reason for change.

I am reasonable, and know not all are perfect, not even me. Maybe I should say I would like the norm to be following rules, self responsibility, and a return of what used to be common sense. If no one speaks up, the (what I consider) downward trend continues. We do need to be clear, the RC requirement only applies to the S owner/employees. S owners can properly not be employees, provided they meet those specific requirements. For owner/employees, it could even be easier than some sort of RC calculation - meaning does the owner/employee's household have enough regular reported income to meet their expenses, with no "withdrawals" during the year? Not something likely called on other than maybe in court, but it could be something the owner/employee receives as advice? Or maybe asking if the owner/employee is or is not the highest paid employee (by hour)? Not saying to turn away work... This sort of thing is a daily issue for me. I do not offer tax advice to my customers, but when they are doing something incorrect, I give my personal experience/knowledge, and suggest thet consult with their local tax expert. Most welcome the information, as many do not have much experience, or go on what that "friend" has told them. A few, and they are ones I never mind losing as a customer - or at least to identify - get snippy.

Definitely not forced to (federal). Some states require a new form. But, unless the employee is termination proof, not likely something to hang their hat on (even though the employer is likely wrong). The address issue is a different animal, but a real issue, not only to get documents to employees, but for proper state and local withholding. When an issue, I ave employees sign a statement each Dec, or as needed, verifying their domicile address.

Just like in the real world, many fail to follow leach laws because their four legged friend is "friendly", "always minds", "is not a danger", "is tiny", or whatever. Does not help those folks when they get ticketed, or at least twice a year, I am forced to pepper spray their four legged friend because of the human's stupidity. To me, "laws don't apply to me attitude" needs to be corrected (and we can all try to change laws we do not like), especially when one is presenting themselves in a manner to represent others, such as the CPA in this example.

Must my day of nits... this is one I often get to mention to my customers, owners not paying themselves reasonable compensation at least as often as "any" employee is required to be paid in their state, for all hours worked. The more owners get educated, the less they have to pay experts to clean up (although clean up is very lucrative, and never short on customers!). I am currently dealing with one customer who has (what they tell me, I do not need to verify) a client who is an S Corp, and pays the owner's payroll once a year, including health insurance. This is a "triple play" as the owner can easily be found to be tax shifting, not meeting their minimum wage and pay frequency regs, and not reporting health insurance when constructively received (even if they really did no services for a pay period, their insurance was valid for every pay period). Many owners who are also employees forget to treat themselves - the employee - as if they - as the employee - were a perfect stranger. Tracking what it costs to pay someone else to do what the owner/employee does, at least to me, is good business practice. (Which can be done by paying the owner/employee what it really costs to replace their services, which is easy to argue is RC.) Gives the owner a true cost of what it would take to step away, and what the business actually generates for income (as opposed to the owner/employee owning just a job).

Something similar to this is what employers should be doing / handing out. https://www.americanpayroll.org/docs/default-source/2019-forms-and-pubs/19n16-2020_form_w-4_letter.pdf First paragraph (bold and italics added by me) "Because the 2020 Form W-4, Employee’s Withholding Certificate, will be very different from previous versions, communicating the changes to employees will be challenging. Payroll professionals must balance the desire to be helpful to employees with the understanding that they need to be careful not to give tax or legal advice. " Also of note: The sample letter comes "from" payroll, with a CC to HR (reinforcing W4 record keeping/compliance is not the purview of HR) Nothing in the sample letter even hints at the employer providing any assistance with preparing the form, but instead, directing to the IRS site for directions and suggestions. PERSONALLY, I would have NOT included the "we recommend", and instead, completely leave out any employer thoughts or opinions.

HR should not normally (if at all) see a W4 form... Payroll sees W4, HR does not need it since HR is not calculating paychecks. Same as HR does not see garnishments, unless there is more than one active (since more than one active can be cause for termination, while one active garnishment cannot). Yes, many mix payroll and HR data, but these days, it is better to keep them separate, even if the same person handles both sets of records.

I disagree. Turn it a bit. Since your client also signs the tax return you prepare, does than mean you need no training, no experience, and have no liability for your mistakes? (Or take it further, do you simply not need to sign the return you prepare because your signature means nothing, despite the actual paid prepare regulations?) The government has put certain collection burdens on preparer's, essentially making preparer's the first line of fraud defense. The government has REMOVED that rule from employers, with the removal of the requirement to submit questionable W4 forms for "inspection" (at least for federal purposes). The employer's obligation is to use the last valid W4 (or the "no W4" requirements). Nothing else. There is no direction requiring an employer to "help" employees with their personal taxes (such as a W4).

I know someone, who for decades as an employee, has zero withheld, other than in December. Perfectly legal as long as enough is WH in December, or manually deposited in time, to meet the WH requirements. Of course, not many have the discipline knowledge... Yes, the person received a lock in letter when the old "send in the W4" rule was removed, but a "quick" phone call removed the lock. My point to my part of this conversation is employers are already "out" of the process because they are not legally directed to offer W4 assistance. Employers, without comment, accept W4 forms, and act on the valid ones. Most employers will return invalid W4 forms, but if done correctly, will have no comment on what is invalid on the form. Employers are robotically withholding and remitting as directed by the employee and tax agency. The issues arise when employees fail to do their part, and ask the employer for assistance with the W4, or blame the employer for what the employee perceives as incorrect withholding. So that leaves, someone like me, who wants to offer employers something to say, quickly and accurately, when employees inquire, with one logical reply. Something similar to "Employers have to follow specific regulations. Employers are required to withhold based on the last valid W4 received, or use the "missing" W4 calculations. Employers are not directed to assist with preparing employee W4 forms in any manner. If an employee needs assistance with preparing their W4 form, the employee's tax preparer is the most reasonable place to seek assistance." Just as preparers have rules they must meet, and things they cannot do (do only what is required, nothing more, nothing less), employers are in the same position. W4 prep is absolutely an item an employer is not required to do or provide. If you accept this as being true, then giving W4 type advice which is useless (such as instructions which cannot possibly be carried out on a valid W4) serves no purpose, and can cause friction between employee and employer, or even between those giving the unusable advice and the client. All should be reviewing their W4 (and results) three times a year, or, if that is untenable, using the new withhold at higher rate option for max withholding calculation. With the withholding calculations being entirely political (instead of relating to liability), the "set and forget" method of times past no longer works. The new W4 settings now have "implied allowances" (to allow for the new and old forms to work) which means the new form has no single/0 or married 0 for those who want more withholding than the "norm". --- Assumes same wages are expected, adjust WH up or down if wages are expected to change). End of Jan, mult WH by 12, and compare to prior year liability. Adjust as needed (via additional WH per check) to meet at least the prior year liability. This is the stay out of under withholding penalty check. If There is no capacity to make a substantial manual deposit at end of year, review at end of June. Make adjustments as needed based on actual Wh for the first 6 months, compared to projected liability. End of Nov. Compare actual WH, plus estimated WH for Dec, against projected liability. It is likely a quick "test" tax return can be done to get a more accurate liability.

Catch-22. Employers must use the "no W4" instructions, or follow the last valid W4. Employers have zero ability to honor any napkin, or handwritten request (except for the new instructions for claiming exempt). Employers face liability if they do anything else, including offering to help with a W4 (and I suspect most preparers don't want any employer or other non trained person offering tax advice). Since I work with employers, I have to know the rules they are subject to, and when asked, advise accordingly. yet here, I see the tax preparer perspective, which does not always align with the rules for the employers. Likely, nothing will change, as there is no financial incentive, but I will continue to try to educate! I just cannot get it through my thick skull how it is any more time consuming for a preparer to recommend legal W4 settings versus giving something the employee cannot actually use (and when attempted, causes conflict with the employer who follows their rules). I get asked often (daily this time of year, and likely multiple times per day in January) what an employer should do when an employee requests a flat percent, or a dollar amount for the year. My answer will remain the same, employer can provide the form and instructions, but is not to help fill out the form, or honor anything other than a valid W4 form. (Yes, there is online training for employers to learn what is valid, since the liability is not to be ignored.) While my opinion hardly matters, the new W4 form, under the current administration's rules, is an improvement, as removing allowances is a good idea, and adding very direct means to indicate credits and other items to alter withholding allows for more accurate withholding. Most complaints are about "change" in general, and the delay in implementation was caused by some unfounded privacy concerns. Of course, the issue would likely be moot, except for the continuing trend of the administration to play with the calculations to try fool voters (and the politicians must be convinced it works, since it continues) into believing they are making more money... The issue is this time, the administration cut the rates low enough to actually cause those who do not manage their withholding (far too many) to not only not get a fat refund, but to owe! Personally, I got many complaints that I must be using incorrect calculations, since employees were complaining about owing. I am certain I lost customers over this, as they just changed instead of accepting the truth. I suspect there was more churn than usual in the tax prep industry as well, for the same reason. Small businesses are the ones I most worry about, as they do not always have the experience to keep them as protected as they can be. We have discussed this before, such as when a preparer's client has an "employee" who is being paid as a contractor, and the consensus is usually to have the "employee" eat the taxes the employer is avoiding, and while usually unspoken, work without benefit of UI or WC coverage.

Employees can ask anything, but employers should not assist. No different than an employee (or clients) asking for marital advice. Employers are tasked with plenty of things, and should not do more than tasked.

The employer should do no such thing! Employers should NEVER prepare a W4 for their employee. The employer must follow exactly what the employee directs, via their latest valid W4. There is no item on a W4 which allows for a flat federal amount per pay period (without knowing how to manage several fields, which most employees cannot do). If an employer helps with a W4, giving any advice, then they have inserted themselves into the liability chain, and if tax prep is regulated in their area, have likely offered tax advice without a license/registration. Same goes for "withhold ##%" advice, the employer has no such ability, and the employee will have no idea how to make it happen. Of course, I look at from the employer side, what rules the employer must follow. Unless you prepare payroll and study the withholding regs, such as W4, you would never know, thus my internal insistence on trying to help educate. Not my area, but a thought... W4 prep is an area which could be profitable. For example, $50 to help prepare a federal W4 and a state form (which is a near must now, separate forms), with all or some applied as a credit on their nest tax prep fee. For regular clients, suggested W4 forms with their return, and a paid review in your "slow" season, say early summer, to enhance retention. For getting new clients, maybe a local ad/offer after your vacation once filing season closes, and again in the fall, to try to get their return business. The flaw is some will simply shop for the highest refund, with no thought as to their free loan to the IRS. I have heard that view before, from many, and I understand, but now, with the withholding tables BARELY, if at all, covering liability, and with the states having their own calculation issues, this is an issue few can ignore.

"correct amount" Very true, and sad. The only correct amount is to under withhold to some comfortable factor, then, as some do (me included), spin up a realistic estimate of actual annual liability the last week of each year, and make a deposit to have withholding plus the deposit cover the projected liability (or at least to get into the no penalty range). It is silly to have enough withheld, knowingly, to get a refund, and just as silly to get into penalty. While I still opine tax preparers are the place employees should go for W4 advice, many preparers do not want the extra work, leaving the employee's to try to get advice elsewhere. The new form will make it worse for those who do not study, since there are no "allowances", and new fields which some will not understand at all..

15 and 15T were posted early on the 24th. One thing I learned over several decades is people just don't like change. I can agree. But, society has changed to the point where the first reaction of trouble is to prove it was not your fault, so I have to also react using common sense, like not letting someone who has important data (such as payroll data) continue to put themselves (and by the blame game, me) in jeopardy via using a known unsafe OS. It is not me who stops updating the OS... If people knew someone holding their data was using an outdated OS, they would/should bolt. One thing which is tough to argue is there is zero excuse for using an outdated OS when the cost is so small. No one was forced to use Vista, XP was perfectly viable and supported. But, many who stuck out with XP over Vista have ignored the consequences of continuing to stick with XP. As an aside, I was just reading that a certain country has figured out how to get past two factor authentication, which so many "experts" think is the solution to security... which is why any behavior other than assuming and acting as if all data could fall out of your hands, is unwise.

A real "prepper" would show zero clues to anyone outside of their circle, and would not ask for such advice from even their tax person .

I have customers, preparing payroll for others, that are griping because they still want to use XP or another obsoleted OS (By the maker of the OS). At the turn of the century, I had some who did the same, insisting they could only use a DOS based OS. I have some who are in "business" claiming they have no internet access, which I know is untrue (except for a monastery), and they must have a CD. (Wayfair makes it untenable to continue to offer CD's based on how certain states implemented Wayfair, and the minuscule number who still ask for a CD.) If I were to have someone else handle data for me, I would ask for information showing their hardware and software maintenance policies and status.