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PrintThe IRS has released the 2023 Publication 15-T, Federal Income Tax Withholding Methods. The publication describes how to figure federal income tax withholding using the percentage method and the wage bracket method and describes alternative methods for figuring withholding. The publication explains how to withhold income tax based on pre-2020 Forms W-4 and 2020 or later Forms W-4, Employee's Withholding Certificate.
The 2023 Form W-4 was released with a few changes and no longer contains directions to use the tax withholding estimator to calculate withholdings.
Withholding on periodic payments of pensions and annuities
Form W-4P, Withholding Certificate for Periodic Pension or Annuity Payments, was redesigned for 2022. The redesigned Form W-4P is used only to request withholding on periodic pension or annuity payments. Previously, Form W-4P was also used to make withholding elections for nonperiodic payments and eligible rollover distributions. Additional withholding on nonperiodic payments and eligible rollover distributions are now made on Form W-4R, Withholding Certificate for Nonperiodic Payments and Eligible Rollover Distributions. While the redesigned Form W-4P and new Form W-4R were available for use in 2022, the IRS postponed the requirement to begin using them until January 1, 2023.
To figure withholding on periodic payments of pensions and annuities based on a 2022 or later Form W-4P or a 2021 and earlier Form W-4P, use Worksheet 1B. Withholding on periodic payments based on a 2021 or earlier Form W-4P may also be calculated using Worksheet 3 (Wage Bracket Method) or Worksheet 5 (Percentage Method).
The IRS has released the 2023 Form W-4R with no substantial changes. A draft 2023 Form W-4P has been released but has not yet been finalized.
Treating pre-2020 Forms W-4 as if they were 2020 or later Forms W-4
Employers may use an optional computational bridge to treat 2019 or earlier Forms W-4 as if they were 2020 or later Forms W-4. Employers use computational procedures and data fields for a 2020 and later Form W-4 to arrive at the equivalent withholding for an employee that would have applied using the computational procedures and data fields on a 2019 or earlier Form W-4.
The computational bridge may be used for lock-in letters based on pre-2020 Forms W-4, and to convert a nonresident alien employee's pre-2020 Form W-4 to a 2020 or later Form W-4. Note: The computational bridge may also be used to treat pre-2022 Forms W-4P as if they were 2022 or later Forms W-4P.
Withholding adjustment for nonresident aliens
Publication 15-T provides the amounts that employers should add to the wages paid to nonresident alien employees working in the United States when figuring their income tax withholding.
Publication 15 (Circular E)
The IRS has released the 2023 Circular E, Employer's Tax Guide (Publication 15). The 2023 Employer's Supplemental Tax Guide (Publication 15-A) and the Employer's Tax Guide to Fringe Benefits (Publication 15-B) have not been released. Circular E explains the requirements for withholding, depositing, reporting, paying, and correcting employment taxes.
Compliance