IRS Suggests Taxpayers Check Their Withholding in Light of Tax Laws

IRS Suggests Taxpayers Check Their Withholding in Light of Tax Laws

With the passing of the new tax laws and taxes recently filed for most individuals, the IRS is urging several taxpayer groups to perform a “Paycheck Checkup” to ensure they are withholding the correct amount from their pay. Key groups who should consider a “checkup” are households with two or more incomes, those who work two or more jobs or only work for part of the year, those who itemize their taxes, those with high incomes or complex tax situations, those who have children or older dependents and those who received a large refund or had large tax bills for 2017.

The new tax laws changed the tax rates and brackets, increased the child tax credit, removed personal exemptions, increased the standard deduction and altered or removed some other deductions. In light of these changes, some employees may need to change how much their employer withholds from each paycheck, and the IRS is encouraging taxpayers to utilize the updated Withholding Calculator to determine the correct amount. When using the calculator, having a completed 2017 tax return and copies of your most recent paystubs is recommended.

Utilizing the Withholding Calculator can help taxpayers determine if they need to fill out a new W-4 to provide to their employer. Although the tax changes do not affect 2017 returns filed in early 2018, taxpayers should check their withholding for 2018 to ensure they are not hit with unexpected tax bills when filing in 2019. Employees who realize they may need to make withholding changes should do so immediately, as they will benefit from having the correct amount withheld for as long as possible throughout the year. Waiting until later in the year could result in bigger changes to each paycheck, which could prove difficult for taxpayers if more taxes must be withheld in light of the new laws.

The accuracy of the results from your withholding calculation are based on the accuracy of the information you provide. As some taxpayers’ situations can change in the middle of the year, – a divorce, a child no longer being a dependent, or beginning a second job – the IRS encourages returning to check the calculator again any time your personal circumstances may adjust the number of allowances you are able to claim.

To further assist taxpayers and help them understand the new tax laws and the importance of checking your withholding, the IRS has released several new YouTube videos as well as a Tax Tip series on their website.