15 Jun Checking withholdings important under new tax law
Steps to check withholdings
In light of the Tax Cuts and Jobs Act, the Internal Revenue Service recommends two-income families, as well as individuals with more than one job, check their paychecks with the Withholding Calculator.
The Tax Cuts and Jobs Act, passed in December 2017, makes significant changes to tax laws, from the standard deduction and increased child credits to changes to tax rates and brackets.
These changes make checking withholding amounts even more important.
The changes affect 2018 returns, which taxpayers will file in 2019.Taxpayers and families with multiple incomes are more likely to either over or underpay following these changes. To guard against an April surprise, check your check as early as possible to make sure the correct amount is being withheld from your check.
If you need to change your withholdings, you should complete a new W-4 form and submit it to your employer as soon as possible.
Waiting to check means there is less time to correct any issues, which could have a bigger effect on each paycheck.
To use the Withholding Calculator, you’ll need your income from all your jobs and your spouse’s jobs, the number of children you will claim for the Child Tax Credit and Earned Income Tax Credit, and other items that will affect your 2018 taxes.
Once all your information is completed, the calculator will recommend how to complete a new W-4 for any or all of their employers, if needed.
If a couple or taxpayer is at risk of being under-withheld, the calculator will recommend an additional amount of tax withholding for each job. To use the Withholding Calculator, taxpayers should have their 2017 tax returns and most recent pay stubs available.
As a general rule, the fewer withholding allowances you enter on your W-4, the higher your tax withholding. Entering “0” or “1” on line 5 of the W-4 means more tax is withheld. Entering a larger number means less tax is withheld, resulting in a smaller tax refund or potentially a tax bill or penalty.
Withholding Calculator results depend on the accuracy of information entered. Taxpayers whose personal circumstances change during the year should return to the calculator to check whether their withholding should be adjusted.