The staff at Betters & Associates is becoming well-acquainted with tax law changes under the new Tax Cuts and Jobs Act. We’re also committed to educating each of you, making you better prepared for its potential impact on your tax liability.
For that reason, we want you to be aware that the new tax law may affect how much you should have withheld by your employer. Here at Betters & Associates, we’ve already found that taxpayers in two-income homes are having too little withheld.
The IRS is encouraging everyone to perform a “paycheck checkup” to make sure the right amount is being withheld from their paychecks. The IRS has developed a Withholding Calculator to help you estimate your 2018 income tax. It compares that estimate with your current tax withholding. This can help determine whether you need to submit a new W-4 to your employer.
The new law has increased the standard deduction, and changed the tax rates and brackets. It has removed personal exemptions, increased the child tax credit, and limited, or even discontinued certain deductions.
Submitting a new W-4 to your employer as soon as possible, if necessary, will help you avoid an unexpected tax liability when filing your 2018 tax return.
The IRS has identified several key taxpayer groups who should check their withholding:
•Those in a two-income family;
•Those who work two or more jobs, or only work part of the year;
•Have children and claim credits, such as the Child Tax Credit;
•Have older dependents, including children age 17 older;
•Have itemized deductions on their 2017 returns;
•Earn high incomes and have complex tax returns;
•Received large tax refunds
You’ll find the IRS’s full article regarding the Paycheck Checkup here: https://www.irs.gov/newsroom/irs-urges-paycheck-checkup-for-key-groups-tax-withholding-may-need-adjustment
This IRS webpage explains how the calculator works, and provides a link to the calculator itself:
Keep in mind that we are always here to help. If you’d like us to create a personalized projection worksheet to help ensure you have enough withheld, our accounting staff can produce one for a small fee.