Calculator Helps Taxpayers Review Withholding Following New Tax Law
The Internal Revenue Service (IRS) has released new versions of Form W-4 and its online withholding calculator to help taxpayers check their 2018 tax withholding following passage of the Tax Cuts and Jobs Act in December 2017. The IRS urges taxpayers to use these tools to make sure they have the right amount of tax taken out of their paychecks.
Among other things, the Tax Cuts and Jobs Act increased the standard deduction, removed personal exemptions, increased the child tax credit, limited or discontinued certain deductions, and changed the tax rates and brackets. If changes to withholding should be made as a result of these changes, the withholding calculator gives
employees the information they need to fill out a new Form W-4. Employees must submit the completed W-4 to their employers.
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
To use the calculator, you’ll need your most recent pay stub from work, as well as a completed copy of your 2017 tax return. Remember, the new withholding rates will not affect your 2017 tax return (the one you’ll file in 2018). However, having a completed 2017 tax return is helpful when using the new withholding calculator. If you don’t have your 2017 tax return, you can refer to your 2016 tax return but the results may not be as accurate.
If the calculator indicates that you need to make changes to your withholding, you will do so using the new
Form W-4, Employee’s Withholding Allowance Certificate. The IRS has now released an updated Form W-4 for 2018 (downloads as a pdf). If you need to make changes to your withholding for 2018, complete and submit to your employer as soon as possible. You do not send the form W-4 to the IRS.
The information in this article is made available for general information purposes only. It is not intended to provide specific regulatory, scientific, or legal advice. The content must not be relied upon as a sole source to determine regulatory compliance or any obligation under state or federal law. We advise consultation with outside legal counsel should you require further information.