Each year by December 1, the IRS requires all employers to distribute an information memo to their employees to review their federal Form W-4, Employee’s Withholding Allowance Certificate information for the next calendar year. If employees know that their federal filing status, exemption allowances, or exempt status has or will change since the last filing of their Form W-4, they are required to complete a new Form W-4. Employees claiming “exempt” from withholding during the current tax year are required to submit a new Form W-4 to their employers by February 15, 2018 in order to maintain their “exempt” status. The 2017 exemption expires on February 15, 2018.
This is also a good time to have employees review their name and social security number, in the ADP Portal, to be sure they match exactly how it is printed on their Social Security Card. This will minimize the number of rejected Forms W-2 and Forms 1095-C. It is also important for employees to review their mailing address, filing status, exemption allowances, and exempt status for state and local withholding purposes as well.
The information memo employers distribute can also include information about the distribution of the Forms W-2; how employees can request reissued Form W-2 statements; the 2018 social security and Medicare tax rates and wage limits; any state legislative information impacting employee pay; and the employer’s holiday and 2018 pay schedules.
It is a recommended best practice to communicate the changes that will affect employees prior to the beginning of the new year or with the first pay check of the new year. The attached template communication can be customized and used to communicate these changes to your employees.