IRS has issued IRS Publication 1494, Table for Figuring Amount Exempt from Levy on Wages, Salary or Other Income, for the 2018 tax year, but the new table doesn’t reflect the Tax Cut and Jobs Act (the Act). The publication is used to determine the amount of wages, salaries, and other income that is exempt from a federal tax levy in 2018.
Background—before the Act. For tax years that began before Jan. 1, 2018, except as otherwise provided in the case of a continuous levy under Code Sec. 6331(h), for levies issued on wages, salary or other income, the amount exempt from levy was determined by adding the standard deduction amount to the dollar amount of the taxpayer’s personal exemptions, and dividing that amount by the number of pay periods in the year (e.g., 52 for employees paid weekly). (Code Sec. 6334(d) before amended by Act Sec. 11041(d))
Rev Proc 2017-58, 2017-45 IRB, which was issued before the enactment of the Act, provided the inflation-adjusted amounts for the personal exemption deduction and the standard deduction for 2018. Those amounts were:
…personal exemption – $4,150; and
…standard deduction – (1) $6,500 for single or married filing separately; (2) $13,000 for married filing jointly and surviving spouses; and (3) $9,550 for head of household.
Background—changes made by the Act. The Act (PL 115-97, 12/22/17) reduced to zero the deduction for personal exemptions for tax years that began after Dec. 31, 2017 and before Jan. 1, 2026. (Code Sec. 151(d)(5)(A), as amended by Act Sec.11041(a)(2))
The Act also increased the standard deduction for 2018 to $24,000 for joint filers and surviving spouses, $18,000 for heads of household, and $12,000 for singles and marrieds filing separately. (Code Sec. 63(c)(2)(A) and Code Sec. 63(c)(7)(A), both as amended by Act Sec. 11021(a))
And, the Act amended Code Sec. 6334(d) by providing that, for any year for which the personal exemption amount is zero, pre-Act Code Sec. 6334(d), as described above, would be applied by treating $4,150 (as adjusted by post-2018 inflation) as the personal exemption amount. (Code Sec. 6334(d)(4), as amended by Act set 11041(d))
On Dec. 26, 2017, IRS issued a statement saying that it is developing withholding guidance to implement the Act, and it anticipates issuing the initial guidance in January 2018. Until then, IRS said, employers and payroll service providers should continue to use the existing 2017 withholding tables and systems. See Weekly Alert ¶ 12 01/04/2018.
IRS issues 2018 table. IRS has now issued the 2018 table, which sets out for employers the amount exempt from levy based on the frequency of the employee’s pay, the number of exemptions he claimed, and his filing status.
IRS Publication 1494 is also used to recompute the exempt amount on levies issued in earlier years for which the taxpayer has given his employer a new statement of exemptions and filing status in 2018.
The personal exemption amount that is used for the table’s calculations in 2018 is $4,150. The standard deduction amounts that are used for the calculations are as follows: (1) $6,500 for single or married filing separately; (2) $13,000 for married filing jointly and surviving spouses; and (3) $9,550 for head of household filing status.
RIA observation: Thus, the new Publication 1494 reflects the Rev Proc 2017-58 inflation-adjusted standard deduction amount and personal exemption amount. While that personal exemption amount equals the $4,150 in Code Sec. 6334(d)(4) as revised by the Act, the table does not reflect current law in that it does not reflect the increased standard deduction amounts contained in the Act.
RIA observation: Presumably, and seemingly consistent with IRS’s Dec. 26, 2017 announcement mentioned under “Background—changes made by the Act,” above, IRS will issue a revised 2018 Publication 1494, perhaps later in January.
References: For amount of wages, salary and other income exempt from IRS levy, see FTC 2d/FIN ¶ V-5236; United States Tax Reporter ¶ 63,314.05.
2018 IRS Publication 1494, Table for Figuring Amount Exempt from Levy on Wages, Salary or Other Income