New Tax Law and Employee Withholding Changes

Employees often complain about their taxes, especially this time of year. The Tax Cuts and Jobs Act made major changes to the tax law. With these changes, your employees should do a paycheck checkup using the new withholding calculator released by the IRS. 

The Internal Revenue Service released an updated Withholding Calculator on IRS.gov and a new version of Form W-4 to help taxpayerscheck their 2018 tax withholding following passage of the Tax Cuts and Jobs Act in December.

The IRS urges taxpayers to use these tools to make sure they have the right amount of tax taken out of their paychecks.

If changes to withholding should be made, the Withholding Calculator gives employees the information they need to fill out a new Form W-4, Employee’s Withholding Allowance Certificate. Employees will submit the completed W-4 to their employer.

Employees and groups who should check their withholding 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.

IRS Outlines Steps to Help Taxpayers: Do a “Paycheck Checkup”

The IRS encourages employees to use the Withholding Calculator to perform a quick “paycheck checkup.”  An employee checking their withholding can help protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time in 2019. It can also prevent employees from having too much tax withheld; with the average refund topping $2,800, some taxpayers might prefer to have less tax withheld up front and receive more in their paychecks.

The Withholding Calculator can be used by taxpayers who want to update their withholding in response to the new law or who start a new job or have other changes in their personal circumstances in 2018.

As a first step to reflect the tax law changes, the IRS released new withholding tables in January. These tables were designed to produce the correct amount of tax withholding — avoiding under- and over-withholding of tax — for those with simple tax situations. This means that people with simple situations might not need to make any changes. Simple situations include singles and married couples with only one job, who have no dependents, and who have not claimed itemized deductions, adjustments to income or tax credits.

People with more complicated financial situations might need to revise their W-4.  With the new tax law changes, it’s especially important for these people to use the Withholding Calculator on IRS.gov to make sure they have the right amount of withholding.

More information is available in the special Withholding Calculator Frequently Asked Questions.


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Review ALL New Hire Forms

including the I-9 Form and the new W-4 Form.


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