Article courtesy Rehmann
In light of the new tax law, the IRS released an updated withholding calculator and Form W-4. The new calculator will assist employees with double-checking the federal tax to be withheld from their paychecks.
The Tax Cuts and Jobs Act made major changes to the tax law. As a result, the IRS encourages taxpayers to use the withholding calculator to perform a “paycheck checkup.”
To use the calculator, taxpayers will need their most recent pay stub and a copy of their 2016 or 2017 tax return. Taxpayers can use the calculator results to determine if they need to file a new Form W-4. Taxpayers who need to make changes to their 2018 withholding should submit it to their employer as soon as possible.
The IRS specifically encourages taxpayers who fall into the following groups to double-check their withholding:
- Two-income families
- Taxpayers with two or more jobs at the same time or who only work for part of the year
- Taxpayers with children who claim credits such as the Child Tax Credit
- Taxpayers who itemized deductions in 2017
- High-income taxpayers and those with complex tax returns
People with more complicated financial situations may need to revise their Form W-4, the IRS noted. Taxpayers with more complicated situations can use Publication 505, Tax Withholding and Estimated Tax, which the IRS anticipates will be available on IRS.gov in early spring, instead of the withholding calculator.
Also, please see the Special Note for 2019 included at the bottom of the IRS Withholding Calculator.