When the Tax Cuts and Jobs Act (TCJA) went into effect, it brought an overhaul to the federal Form W-4 along with it. Among a number of changes, the most significant one was the removal of federal withholding allowances.
Up until 2020, Wisconsin employees have been able to use the federal Form W-4 as a substitute for Wisconsin Form WT-4 if their federal allowances were equal to their state allowances. But, since the IRS gave the federal form a makeover, that’s no longer the case. Requirements for the Wisconsin state WT-4 and federal W-4 have changed, and it’s important for employers to take note.
What does this mean for Wisconsin employers?
As of January 1, 2020, Wisconsin employers are required to collect a federal Form W-4, and a Wisconsin state Form WT-4 (Employee’s Wisconsin Withholding Exemption Certificate) from all newly hired Wisconsin employees. The federal Form W-4 can no longer be used in place of the state Form WT-4. Additionally, employers need to collect a Form WT-4 if employees want to change their number of state withholding exemptions. But, if existing employees have no changes to their state withholding exemptions, they do not need to provide the Form WT-4 to employers — unless employers request it.
Are there any other employer requirements for Wisconsin withholding allowances?
Good question. Yes, employers need to be vigilant about the number of exemptions employees claim, since those are tied to allowances. If employees claim more than 10 exemptions or claim complete exemption from withholding and earn more than $200 per week, employers are required to mail a copy of their Form WT-4 to the Wisconsin Department of Revenue (DOR). Similarly, if employers believe an employee has claimed more exemptions than they’re entitled to, they should mail a copy of their Form WT-4 to the Wisconsin Department of Revenue.
Keep up with compliance
With the amount of changes in the federal Form W-4, it’s important to make sure you’re up to speed with the latest, which we’ve outlined here. And please note, if you have employees in states outside of Wisconsin, check the state’s Department of Revenue website to see if they have new withholding form changes and requirements.
Editor’s note: Updated on 10.12.20 with the most up-to-date information.