The US Internal Revenue Service (IRS) has issued a new W-4 form for 2020 to reduce complexity and increase accuracy. The new form is designed to reduce the difference between the annual amount withheld and the tax from the 1040 form. The main difference between the old form and the new is that allowances are no longer used. The previous form had the withholding allowance tied to your personal exemption. New laws have changed this so that you cannot claim personal exemptions or dependency exemptions. The new form is really meant to ask more straightforward questions to arrive at a more accurate withholding rather than using complicated worksheets. The new 2020 W-4 Form can be found on the IRS website (https://www.irs.gov/pub/irs-pdf/fw4.pdf).
What steps need to be taken?
If you are a client who is live in production, Oracle will have already patched the Statutory Maintenance Pack in December 2019. If you haven’t received the patch yet, you will need to log a service request through My Oracle Support and request an update for the 2020 W-4 functionality. To confirm you have the new functionality, check the Responsive Pages and the Enhanced Interface for Tax Withholding.
New hires in 2020 will automatically see the new form. Employees hired before 2020 are not required to change their filing, but the IRS strongly recommends that they file with the new W-4. We also encourage filing with the new form because there would be a significant tax difference when filing the 1040 with the old W-4. We would also suggest that you notify employees of the changes and refer them to the IRS FAQ, available here: (https://www.irs.gov/newsroom/faqs-on-the-2020-form-w-4).
We encourage you to prepare your Tax Card User Interface for the change by reviewing the supporting Oracle documentation (ID 2592797.1). Following these instructions will allow you to have access to the new W-4 functionality for all employees.
Prior to the 19D update, both the Responsive UX and Tax Withholding Enhanced Interface were required for the 2020 W-4. With the new profile option PAY_CALCULATION_CARD _RESPONSIVE_ENABLED, the Payroll Responsive Profile is no longer mandatory. However, opting into the responsive profile will enable Employee Self-Service features such as Payment Methods, Payslips, Year-End Documents, Document Delivery Preferences and Tax Withholding.
If you are still using Payroll Batch Loader to load W-4 fields, you should know that Oracle will be enforcing a switch to HCM Data Loader. This means that HDL will be the only method for bulk loading payroll business objects into Cloud. For more information on HDL, check out the supporting Oracle documentation (ID 2558276.1) and pay special attention to the “Loading Tax Withholding Information for the US Using HCM Data Loader” section.
Any W-4 information being used for inbound or outbound purposes, such as HCM extracts or custom reports, will require changes to continue supporting their processes. Now is a good time to review any custom reports you have created and compare them to available delivered reports to see where there is opportunity to standardize and prevent any issues with changing forms in the future.
Interested in further learning opportunities surrounding Oracle Cloud HCM? View our webinar recording of “Security and Reporting in Oracle HCM Cloud: Tips & Tricks” here.