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Everyone should check their withholding

It's important to revisit your tax withholding after major changes from the Tax Cuts and Jobs Act. A Paycheck Checkup can help you see if you’re withholding the right amount of tax from your paychecks. Too little could mean an unexpected tax bill or penalty.

 

You will need your . . .

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most recent pay stubs
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most recent income tax return

You should check your withholding if you . . .

Families with two incomes or someone who has multiple jobs  may be more vulnerable to being underwithheld or overwithheld following major law changes. The Withholding Calculator can help navigate the complexities of multiple-employer tax situations and determine the correct amount of tax for each employer to withhold.

Resources:

  • IR-2018-124, Two-income families, taxpayers working multiple jobs should check withholding amount

Any changes that a part-year employee makes to their withholding can affect each paycheck in a larger way than employees who work year-round. The Withholding Calculator can help taxpayers with part-year employment estimate their income, credits, adjustments and deductions more accurately and check if they have the right amount of tax withheld for their situation.

Resources:

  • IR-2018-118, Seasonal, Part-year Workers Urged to Check Tax Withholding Amount

The law expanded and made significant changes to the Child Tax Credit. It also suspended the deduction for personal exemptions. Parents and caregivers should do a Paycheck Checkup to determine how these changes could affect their tax situation.

Resources: 

  • News Releases:
    • IR-2018-167, Taxpayers with children, other dependents should check their withholding soon
    • IR-2018-217 , Get Ready for Taxes: Here’s how the new tax law revised family tax credits
  • Tax Tips:

The Tax Cuts and Jobs Act added a new credit. Dependents who can’t be claimed for the Child Tax Credit may qualify taxpayers for the Credit for Other Dependents. This is a credit of up to $500 per qualifying person. Parents and caregivers should do a Paycheck Checkup to determine how these changes could affect their tax situation.

Resources:

The Tax Cuts and Jobs Act nearly doubled standard deductions and changed several itemized deductions. Some individuals who formerly itemized may now find it more beneficial to take the standard deduction. This change could affect how much a taxpayer should have their employer withhold from their pay. Even those who continue to itemize deductions should check their withholding because of these changes.

Resources:

  • News Releases:
    • IR-2017-210, IRS Advisory: Prepaid Real Property Taxes May Be Deductible in 2017 if Assessed and Paid in 2017
    • IR-2018-32, Interest on Home Equity Loans Often Still Deductible Under New Law 
    • IR-2018-122, IRS issues notice on state and local tax deductions
    • IR-2018-127, Law change affects moving, mileage and travel expenses
    • IR-2018-222, IRS provides tax inflation adjustments for tax year 2019
    • IR-2018-230, Get Ready for Taxes: Tax reform changes likely to reduce number of taxpayers who itemize
       
  • YouTube Videos: 

A Paycheck Checkup is especially important for taxpayers with high incomes and complex returns because they are likely affected by more of the changes in the law than people with simpler returns. A Paycheck Checkup is also important for taxpayers who make quarterly estimated tax payments to cover other sources of income or those who are subject to the self-employment tax or alternative minimum tax.

Resources:

  • IR-2018-165, Taxpayers with high incomes, complex returns: Check withholding soon

The Tax Cuts and Jobs Act made major changes to the tax law. Any of these far-reaching changes could affect refund amounts. The IRS encourages everyone , including those who typically receive large refunds, to do a Paycheck Checkup to make sure they have the right amount of tax taken out of their pay. 

Resources:

  • IR-2018-163, Got a big tax refund? Use IRS Withholding Calculator to boost take-home pay in 2018

Taxpayers who owed additional tax when they filed their last federal tax return can avoid another unexpected tax bill next year by doing a Paycheck Checkup.

Resources:

  • IR-2018-145, Tax bill this year? Check withholding soon, avoid another one next year


 You can use the results from the Withholding Calculator to determine if you should:

  • complete a new Form W-4, Employee’s Withholding Allowance Certificate, and submit it to your employer.
  • complete a new Form W-4P, Withholding Certificate for Pension or Annuity Payments, and submit it to your payer.
  • make an additional or estimated tax payment to the IRS before the end of the year. 
 

Helpful Resources

Withholding Calculator

Tax Reform

Withholding and Estimated Taxes

Forms

  • Form W-4, Employee’s Withholding Allowance Certificate
  • Form W-4P, Withholding Certificate for Pension or Annuity Payments
  • Form 1040-ES, Estimated Tax for Individuals

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