On February 1, 2018, the IRS stated in its monthly payroll industry call that the federal tax levy exempt amounts reflected in Publication 1494 will be updated later this month to reflect changes under the Tax Cuts and Jobs Act (TCJA) that are effective January 1, 2018.
Currently, the 2018 Publication 1494 reflects only the 2018 inflationary adjustments and not the loss in the personal allowance deduction under the TCJA. Employers may use the amounts shown in the 2018 Publication 1494 until the revised version is published.
When the IRS takes action to levy an employee’s wages, the employer is sent Form 668-W(ICS) or Form 668-W(C)DO, Notice of Levy on Wages, Salary, and Other Income (or other levy form). Contained in the Form 668 levy form is a statement of exemptions and filing status to be completed by the employee.
Using this statement of filing status and personal exemptions provided by the employee, the employer computes the portion of wages exempt from levy using Publication 1494, Tables for Figuring Amount Exempt from Levy on Wages, Salary, and Other Income (Forms 668-W(ACS), 668-W(c)(DO) and 668-W(ICS)).
The amount exempt from levy is computed as the annual value of the standard deduction plus personal allowances divided by the number of payroll periods the employee is paid. Because the value of the standard deduction and personal allowance is indexed each year for inflation, the IRS updates Publication 1494 each tax year. However, the annual inflation adjustment is not taken into account in computing the amount exempt from levy unless the employee submits another statement of filing status.
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This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.