March 13, 2018|
On February 28th, the IRS released the Withholding Calculator and new Form W-4. Employees are encouraged to go on the IRS website and use the calculator to find out if the new withholding rates are withholding enough for them. This “Paycheck Checkup” will help determine the correct number of withholding allowances for their personal circumstances. The IRS recommends that ALL employees do the Paycheck Checkup, but it is especially important for taxpayers who previously itemized, have 2 or more jobs, or have dependents.
To access the Withholding Calculator please visit the IRS website or the helpful links page of our Faw Casson site. https://www.irs.gov/individuals/irs-withholding-calculator
The Calculator will ask you a series of questions including:
Once you’ve completed the questions, the calculator will reveal how you should adjust your new W-4. It will say how many allowances, which taxpayer should claim them for married taxpayers, and what filing status you should use. It will let you know how much you will owe or get refunded if you do not change your withholdings, and how much you will get refunded if you make the suggested changes.
The New W-4
The new W-4 is almost identical to the prior w-4. One notable change is that the phase out amounts for child tax credits were updated. Once employees get their paycheck checkup results, they should fill out the W-4 based on the results and turn it into their employer. The IRS is not requiring that all employees file a new W-4 at this time, but based on your Withholding Calculator results, it may be advantageous.
The income tax withholding tables have now been updated to reflect the changes made by the tax reform legislation at the end of 2017. Employers may use either the percentage method or the withholding tables. They will have to get an updated copy of the tables to use the correct 2018 numbers.