United States : Updated Withholding Calculator, Form W-4 Released; Calculator Helps Taxpayers Review Withholding Following New Tax Law.
The Internal Revenue Service today released an updated Withholding Calculator on IRS.gov and a new version of Form W-4 to help taxpayers check their 2018 tax withholding following passage of the Tax Cuts and Jobs Act in December.
The IRS urges taxpayers to use these tools to make sure they have the right amount of tax taken out of their paychecks.
Following the major changes in the tax law, the IRS encourages employees to check their paychecks to help ensure theyre having the right amount of tax withheld for their personal situation, said Acting IRS Commissioner David Kautter.
The Tax Cuts and Jobs Act made changes to the tax law, including increasing the standard deduction, removing personal exemptions, increasing the child tax credit, limiting or discontinuing certain deductions and changing the tax rates and brackets.
If changes to withholding should be made, the Withholding Calculator gives employees the information they need to fill out a new Form W-4, Employees Withholding Allowance Certificate. Employees will submit the completed W-4 to their employer.
Withholding issues can be complicated, and the calculator is designed to help employees make changes based on their personal financial situation, Kautter said. Taking a few minutes can help taxpayers ensure they dont have too little or too much withheld from their paycheck.
The withholding changes do not affect 2017 tax returns due this April. However, having a completed 2017 tax return can help taxpayers work with the Withholding Calculator to determine their proper withholding for 2018 and avoid issues when they file next year.
Steps to Help Taxpayers: Do a Paycheck Checkup
The IRS encourages employees to use the Withholding Calculator to perform a quick paycheck checkup. An employee checking their withholding can help protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time in 2019. It can also prevent employees from having too much tax withheld; with the average refund topping $2,800, some taxpayers might prefer to have less tax withheld up front and receive more in their paychecks.
The Withholding Calculator can be used by taxpayers who want to update their withholding in response to the new law or who start a new job or have other changes in their personal circumstances in 2018.
As a first step to reflect the tax law changes, the IRS released new withholding tables in January. These tables were designed to produce the correct amount of tax withholding -- avoiding under- and over-withholding of tax -- for those with simple tax situations. This means that people with simple situations might not need to make any changes. Simple situations include singles and married couples with only one job, who have no dependents, and who have not claimed itemized deductions, adjustments to income or tax credits.
People with more complicated financial situations might need to revise their W-4. With the new tax law changes, its especially important for these people to use the Withholding Calculator on IRS.gov to make sure they have the right amount of withholding.
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|Date:||Mar 3, 2018|
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