Last month, the IRS released an updated online Withholding Calculator and a new version of Form W-4 to help taxpayers check the amount of withholding after enactment of the Tax Cuts and Jobs Act, which increased the standard deduction, removed personal exemptions, and increased the child tax credit, among other changes.
The tools will help taxpayers confirm that the right amount of tax is being taken out of their paychecks based on their personal circumstances. Many people with simple situations may not need to make any changes. However, those with more complicated financial situations, such as two-income families, people who claim the Child Tax Credit, those with itemized deductions, workers with more than one job, and people with high incomes, should check their withholding with the new calculator.
While the withholding changes do not affect 2017 tax returns, the Withholding Calculator can help taxpayers ensure they have the proper withholding for 2018 to avoid an unexpected tax bill or penalty if they have too little tax withheld, or adjust the tax withheld up front to receive more in their paychecks.
If taxpayers need to make changes to their withholding, the updated Withholding Calculator will help them complete a new Form W-4, which they should submit to their employer.
To further assist taxpayers, the IRS has published a Frequently Asked Questions about the calculator. For more information, call 866.658.8800 or your CPS Client Relations Specialist.