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 2026.

On Worksheet 1A. Employer's Withholding Worksheet for Percentage Method Tables for Automated Payroll Systems (page 10 in the 2026 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.

Version 15 of PowerChurch Plus

The employees' Federal Withholding item was redesigned in Version 15 to more clearly and accurately set up each employee's preferences from their W4. From the Maintain List of Employees screen, click on the Pay Items tab, then double click the employee's Federal Withholding deduction item.

The options that you have on this screen are to enter a manual amount, a percentage, or assign a tax table. When you assign a tax table, you will then have an Employee has 2020 W4 checkbox option. If that is unchecked, you will see the standard number of withholdings and additional withholding amount fields. 

Checking the 2020 W4 option reveals fields where you would input values from that employee's W4 form.

As an existing user of PowerChurch Online or a desktop PowerChurch Plus user that upgraded to Version 15 of PowerChurch Plus, the Employee has 2020 W4 checkbox should be checked automatically if the employee had the Use standard deduction option checked in Versions 12 or 14. As detailed in the version-specific topics below, it may be that this "standard deduction" amount from Worksheet 1A - line 1g was previously entered into the employee's Box 4b Deductions field. That amount should now be recorded in the Standard Deduction field on the tax table, rather than manually entered on each employee's deduction item.

Versions 12 and 14 of PowerChurch Plus

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 was added to the employees' Federal Withholding deduction items.

When updating the new year Federal tax tables, enter the amount from Worksheet 1A - line 1g in the Standard Deduction field. If you had previously entered that amount in the employee's Box 4b Deductions field, you can either remove that amount and check the Use standard deduction option, or leave it as is with the option unchecked.

Version 11.5 of PowerChurch Plus

Version 11.5 was the oldest version that was updated with the new 2020 W4 fields. All employees' Federal Withholding items showed the new W4 fields, along with a number of withholding allowances. If the employee has a 2019 or prior W4, you would simply enter the number of withholding allowances and make sure that your new year Federal tax tables have the Amount for one withholding allowance assigned. For employees with a 2020 and later W4, you would fill out the appropriate W4 fields on the Federal Withholding item and ensure that the number of withholdings was set to 0.

Because Version 11.5 has not been updated with the redesigned Federal Withholding item and the Federal tax tables don't have the Standard Deduction field, you would need to include the amount from Worksheet 1A - line 1g in each employee's W4 Box 4b Deductions field.

Since Version 11.5 has not received several years' worth of 1099, W2, and 941 updates, it is highly recommended that you upgrade to the latest version of PowerChurch Plus!