Following the major changes in the tax law, MJW EA & Company is recommending that taxpayers check their most recent paychecks to help ensure they’re having the right amount of tax withheld for their personal situation.
We are running a simple tax planner after we have prepared your 2017 return so you can see how the new tax rates will change things for you in 2018. Additionally, the IRS has released their updated Withholding Calculator and Form W-4 to help you make sure you have the proper amount taken out of your paychecks.
We are encouraging employees to use the Withholding Calculator to do a quick “paycheck check-up.” Checking your withholding can protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time in 2019.
The Tax Cuts and Jobs Act made many changes in the tax code, including some trade-offs. It doubled the standard deduction but also removed personal exemptions. While it increased the child tax credit, it also limited or discontinued certain deductions and changed the tax rates and brackets.
Because of all the tax law changes it is especially important for certain taxpayers to use the Withholding Calculator to ensure you have the proper withholding. Among those who should check their withholding are:
- Two-income families
- People with two or more jobs at the same time or who work only for part of the year
- People with children who claim credits such as the Child Tax Credit
- People who itemized deductions in 2017
- People with high incomes and more complex returns. That includes those who owe self-employment tax, the alternative minimum tax, or tax on unearned income from dependents and people who have capital gains and dividends.
The Withholding Calculator asks taxpayers to estimate their 2018 income, along with other items that could have an impact on their taxes, including the number of children claimed for the Child Tax Credit, Earned Income Credit and other items.
It is also good practice to check in throughout the year if your personal situation changes, whether it be a new job, a house sale or purchase or coming into unexpected money. As always, we are here to help.