April 10, 2018 You may be getting a tax refund in early 2018, but it’s important to start planning for 2019. The IRS encourages a “paycheck checkup” following recent changes to the tax law. You can use the IRS Withholding Estimator on IRS.gov. The estimator can help prevent having too little tax withheld -- and an unexpected tax bill next year. With the average refund topping $2,800, the estimator can also help you determine to have less tax withheld up front and receive more in your paychecks now. Changes to the tax law affect the 2018 return you will file in 2019. The Tax Cuts and Jobs Act made changes, including increasing the standard deduction, removing personal exemptions, increasing the child tax credit, limiting or discontinuing certain deductions and changing the tax rates and brackets. To use the IRS Withholding Estimator for your “paycheck checkup”: Gather your most recent pay stub from work. Check to make sure it reflects the amount of federal income tax that you have had withheld so far in 2018. Have a completed copy of your 2017 - or possibly 2016 - tax return handy. Information on that return can help you estimate income and other items for 2018. However, note that the new tax law made significant changes to itemized deductions. Use the results from the Withholding Estimator to determine if you should complete a new W-4 form and, if so, what information to put on it. If you complete a new W-4, you should submit it to your employer as soon as possible. Doing this early means there’s more time for tax withholding to take place evenly during the rest of the year. Waiting until later in the year means there are fewer pay periods to make the tax changes – which could have a bigger impact on each paycheck. For people with more complicated financial situations, it’s especially important that they use the Withholding Estimator on IRS.gov to make sure they have the right amount of withholding: Are a two-income family. Have two or more jobs at the same time or only work part of the year. Claim credits like the child tax credit. Have dependents age 17 or older. Itemized deductions in 2017. Have high income or a complex tax return. Have a large tax refund or tax bill for 2017. See IRS.gov/withholding for more information.
