Both the IRS and the Oregon Department of Revenue made some changes to payroll taxes and payroll tax reporting during 2018 which affect every employee in the state. Both employers and employees need to be informed about the changes in order to be prepared for upcoming year.

IRS – new Form W-4

As most of you already know, the 2017 Tax Cuts and Jobs Act instituted many changes to the federal tax code. One of the changes made was to reduce the amount of federal tax withheld from employee’s wages.

For some taxpayers, this reduction has resulted in insufficient federal withholding, meaning you may end up owing tax unexpectedly when you file your 2018 tax returns.

The IRS recently updated the 2019 form W-4 that reflects these changes. Even if you do not think you will be affected, it is a good idea to file an updated form. Your employer should be able to provide you with the new form or you can access it through the following link: https://www.irs.gov/pub/irs-pdf/fw4.pdf

Oregon form W-4

Because of the withholding changes made by the Federal Tax Cuts and Jobs Act, the federal form W-4 is not calculating the Oregon allowances properly. Oregon has recognized this and has created an Oregon only Form W-4. Please go to the following link for the form and instructions, and to see if you may need to fill out this Oregon only form: https://www.oregon.gov/DOR/forms/FormsPubs/form-or-w-4_101-402_2019.pdf

Oregon Statewide Transit Tax

Oregon instituted a statewide transit tax in July 2018. This new tax comes with several filing requirements, including quarterly and annual reports. Here is a link to information, forms, and instructions on the Oregon Department of Revenue web page:

https://www.oregon.gov/DOR/programs/businesses/Pages/statewide-transit-tax.aspx

Many business owners received notices from Oregon Department of Revenue last year demanding payment of the Statewide Transit Tax, even though their company did not file payroll reports. If you received this notice, please contact your tax advisor for assistance responding to the notice.

As always, we are here to answer any of your tax and accounting questions. Please do not hesitate to call us!