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Keeping Your Balance: Time for a paycheck checkup.

Byline: James C. DeRidder

Now that most of us have filed our 2018 tax returns, did your tax situation turn out as you had expected? If not, now is the time to do a paycheck checkup using your recently completed 2018 tax return and the IRS withholding calculator. It is a good idea to do a paycheck checkup every year, but with the tax law changes made in the Tax Cuts and Jobs Act (TCJA) enacted in December of 2017, and a change to the withholding tables in 2018, it is even more important than ever.

Some of the things that affected many taxpayers as a result of TCJA included lower tax rates, increased standard deductions, elimination of personal exemptions, increased child tax credit and limited or eliminated deductions. As a result, taxpayers are encouraged to check their withholdings, even if they did a paycheck checkup in 2018.

This includes taxpayers who:

Have children and claim credits, such as the Child Tax Credit;

Have older dependents, including children age 17 or older;

Itemized deductions in the past;

Are a two-income family;

Have two or more jobs at the same time;

Only work part of the year; and

Have high income or a complex tax return.

Even without the changes made by TCJA, anyone that had the following would be advised to do a checkup:

Adjusted their withholding in 2018 especially those who did so in the middle or later part of the year;

Owed additional tax when they filed their tax return this year;

Had a refund that was larger or smaller than expected; and

Had life changes such as marriage, childbirth, adoption, buying a home or when income changes.

Now is the best time to do a checkup on your withholding, since a completed tax return is useful when using the withholding calculator on Taxpayers will need to estimate deductions, credits and other amounts for 2019, so having similar information from the 2018 return can make using the withholding calculator easier. It is also important to have your most recent paystubs handy, and to remember that the calculator's results are only as accurate as the information you enter.

You can find the IRS calculator at, and if after you do the paycheck checkup you decide to change your federal withholding allowances, you can find a new Form W-4 at

Now that you have gone though the process of doing a paycheck checkup for your federal withholdings, what if you live in the great state of New York? While many people would think that they would use the same number of withholding allowances as the number claimed on their federal Form W-4, this is generally not the case.

New York was opposed to many of the changes in TCJA, and because of this they decided that they would not follow most of those changes, especially as it applied to itemized deductions.

Since New York follows the federal law prior to TCJA, some of the new differences are as follows:

Medical and dental expenses. For federal purposes, you can deduct expenses that exceed 7.5% of your federal adjusted gross income (FAGI). For New York purposes, you can deduct only the part of your medical and dental expenses that exceeds 10% of your FAGI.

Taxes you paid. For federal purposes, your total itemized deduction for state and local taxes is limited to a combined amount not to exceed $10,000 ($5,000 if married filing separate). In addition, you can no longer deduct foreign taxes you paid on real estate. For New York purposes, your state and local taxes are not subject to the federal limit and you can deduct foreign taxes you paid on real estate.

Interest you paid. For federal purposes, the itemized deduction rules for home mortgage and home equity interest you paid have changed from what was allowed as a deduction for tax year 2017. For New York purposes, these changes do not apply.

Gifts to charity. For federal purposes, the itemized deduction limitation for certain cash contributions has increased from 50% to 60% of your FAGI. For New York purposes, the limitation for these cash contributions remains at 50% of your FAGI.

Casualty and theft losses. For federal purposes, you can no longer claim an itemized deduction for a casualty or theft loss unless it is the result of a federally declared disaster. For New York purposes, you can claim casualty and theft losses. However, for a casualty loss that is the result of certain federally declared disasters.

Job expenses and certain miscellaneous deductions. For federal purposes, you can no longer claim an itemized deduction for job expenses and certain miscellaneous deductions that were subject to the 2% of FAGI limitation. For New York purposes, you can claim these deductions.

Other miscellaneous deductions. For federal purposes, the rules for deducting 2018 gambling losses have changed. For New York income tax purposes, gambling loss deductions are limited to the amount of gambling income reported on your return.

Because of these differences, you may find that your itemized deductions between federal and New York are considerably different, or you may even claim the standard deduction for federal but still itemize for New York.

Unfortunately New York does not have a nice online calculator, so to do a paycheck checkup for New York, you will need to fill out the worksheets in the instructions to Form IT-2104. Form IT-2104 is New York's equivalent to the Federal Form W-4 and can be found at

While doing a paycheck checkup may tax a little time, hopefully you will be able to make the necessary changes so that you won't have any big surprises come next tax season.

James C. DeRidder, CPA, is a principal with Mengel, Metzger, Barr & Co. LLP. He can be reached at

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Publication:Daily Record (Rochester, NY)
Geographic Code:1U2NY
Date:May 9, 2019
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