Knowledge Base

Handling Standard Deductions for Federal Withholding

With the redesign of the W4 form in 2020, a new facet of the Federal Withholding tax calculation was introduced. The documentation referenced below is from Publication 15-T from the IRS for tax year 2022.

On Worksheet 1A. Employer's Withholding Worksheet for Percentage Method Tables for Automated Payroll Systems (page 8 in the 2022 publication) step 1g shows the following:

This section of the worksheet applies specifically to an employee who has submitted a W4 form for 2020 or later and has not checked the box in Step 2 on that form.

A Maintenance Release update for Versions 12 and 14 added an optional Standard Deduction field on the Federal Withholding tax tables and a Use Standard Deduction checkbox option on the employee Federal Withholding deduction items. Prior to this update, the following steps were necessary to make the calculations in PowerChurch correct.

This "Standard Deduction" amount would need to be manually entered onto the employee's Federal Withholding pay item.

To do this, go to Accounting > Payroll > Maintain List of Employees. Use the Locate button to bring up the employee in question, then click on the Pay Items tab. Double click on their Federal Withholding item and enter the appropriate amount in the "W4 Box 4b Deductions" field. If the employee already has an amount in that field, add this amount to it.

For 2024, if the employee is "Married Filing Jointly" the correct amount is $12,900. Otherwise, it is $8,600.

If you have Versions 12 or 14 of PowerChurch Plus and had previously added the amounts in "W4 Box 4b Deductions", you can leave them as is and the software will continue to function as expected. Otherwise, you can enter the appropriate amount in the "Standard Deduction" field on the Maintain Tax Tables screen, then on the employee pay items, remove the amount in "W4 Box 4b Deductions" and check the new "Use Standard Deduction" option.

Created: 01/05/2022
Last updated: 12/28/2023