Federal Income Tax Withholding (Link to USPS Bulletin)
The 2017 Tax Cuts and Jobs Act made major revisions that affected taxpayer withholding. Due to changes in the law, personal exemptions are no longer a central feature of the tax code. The Internal Revenue Service updated Form W-4, Employee’s Withholding Allowance Certificate, to reflect these changes. Employees who have submitted Form W-4 in any year before 2020 are not required to complete a new form, and USPS® will continue to compute withholding based on information from the employee’s most recently submitted Form W-4.
For employees who do submit a revised Form W-4 in 2020, withholding will be based on expected filing status and standard deduction for the year. Employees can also choose to have qualified children and other dependents, multiple jobs or spouse works, and other income and deductions reflected in their withholding.
- Contributions made by employees to the following programs continue to be treated as pretax monies for federal tax computations:
- Commuter Program (CPP) up to the transit/parking pretax limits.
- Federal Employees Dental and Vision Insurance Program (FEDVIP).
- Health Benefits (HB):
- Federal Employees Health Benefits (FEHB), unless the employee declined the pre-tax benefit.
- USPS Health Benefits (USPS HB), only if the employee opted for pretax contributions.
- Flexible Spending Accounts (FSA).
- Health Savings Account (HSA).
- Traditional Thrift Savings Plan (TSP).
Regardless of whether employees have completed a revised 2020 Form W-4, it is recommended that they visit irs.gov and complete a “paycheck checkup” using the Tax Withholding Estimator (see irs.gov/individuals/tax-withholding-estimator).
Reference: www.npmhu.org
