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On February 28, 2018 the IRS released a new Withholding Calculator, as well as a new version of Form W-4. The new Withholding Calculator will let employees check that their federal tax withholding is proper following the passage of the Tax Cuts and Jobs Act in December.
The Tax Cuts and Jobs Act made major changes to the tax law. Some of the changes included increasing the standard deduction, removing personal exemptions, increasing the child tax credit, limiting or discontinuing certain deductions and changing the tax rates and brackets.
The new withholding calculator provides employees with the information they need to fill out a new Form W-4. The IRS encourages employees to use the withholding calculator to perform a “paycheck checkup” especially for employees with more complicated financial situations.
Among the groups who should conduct a checkup are:
- 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
- People with high incomes and more complex tax returns
The IRS has provided additional information in the form of frequently asked questions. For more information and to review the IRS News Release click here.
You can also find links to the Withholding Calculator and new Form W-4 in our resources section, here.