IRS Encourages ‘Paycheck Checkup’ for Taxpayers to Check Their Withholding

With the passage of the Tax Cuts and Jobs Act, the IRS is encouraging taxpayers to ensure that their employers are withholding the correct amount from their paychecks. Withhold too little, and you may face a hefty tax bill. Withhold too much, and you may be restricting your monthly income. Luckily, the IRS has assembled a few tools to help taxpayers find the right amount to withhold in their paychecks.

Is a Paycheck Checkup Right for You?

The IRS recommends that anyone earning an income should ensure that their withholding is correct. However, more specifically, individuals with the following circumstances should complete a Paycheck Checkup to ensure that their withholding is accurate:

1. Families with two incomes.
2. People working two or more jobs.
3. People who work for only part of the year.
4. People with older dependents, including children 17 or older.
5. People who itemized their deductions in the previous year.
6. People with high incomes and more complex tax returns.
7. People with large tax refunds or large tax bills for the previous year.

Changes to Tax Law

The new law passed by Congress in late 2017 changed multiple areas of the tax code. These changes include:

1. An increased standard deduction
2. Removal of personal exemptions
3. Increased Child Tax Credit
4. Limited or discontinued deductions
5. Altered tax rates and income brackets

Using The IRS Withholding Calculator

The newly updatedIRS Withholding Calculator can walk you through your tax withholding through a few easy steps online. Keep in mind that you’re going to want to keep your most recent pay stubs and income tax returns handy to get the most accurate estimate from the calculator.

Filing a New W-4 Form

If you find that you need to change your withholding, you’ll need to complete a new W-4, otherwise known as the Employee’s Withholding Allowance Certificate. Submitting a new W-4 with the correct withholding will allow your employer to withhold the appropriate amount for your tax bill.

You Could Use a Professional

Think these tax law changes are a bit overwhelming? You’re not alone. We’re here to help guide you through the new tax law and how it affects your tax returns. Taxes are a complicated matter that requires an experienced professional for accuracy and effectiveness. You can trust Marc Egort, CPA to be your source for your accounting, business, and compliance needs. Check out our website and contact us today for a consultation!