The new version of Form W-4 and an updated withholding calculator to reflect the recent tax law are now available.
The Tax Cuts and Jobs Act, which was signed into law in December, made major tax law changes for individuals, including changing tax rates and tax brackets.
The IRS issued in January new withholding tables to reflect the new law and employers were instructed to begin using the 2018 withholding tables by Feb. 15.
The updated withholding tables were designed to work with existing W-4s that employers have on file, but many taxpayers (such as those with children or multiple jobs, and those who itemized deductions under prior law) are affected by the new law in ways that can’t be accounted for in the new withholding tables.
This is a good time for all employees to review their withholdings and make any adjustments to help protect against having too much or too little tax withheld. This is especially important for:
- Two-income families;
- People with two or more jobs at the same time or who only work for part of the year;
- People with children who claim credits such as the Child Tax Credit;
- People who itemized deductions in 2017; and
- People with high incomes and more complex tax returns.
Those who owe self-employment tax and pay estimated quarterly taxes should also review their withholdings. An updated Publication 505 will be released this spring to assist those in that situation.
In the meantime, please do not hesitate to give us a call and we can advise you on your best steps moving forward.