Thursday June 21, 2018
Time for a 'Paycheck Checkup'
In IR-2018-120, the Service urged taxpayers to use the Withholding Calculator on www.IRS.gov for a "Paycheck Checkup."
The passage of the Tax Cuts and Jobs Act (TCJA), brought many changes that will affect taxpayers. With the TCJA's higher standard deductions ($12,000 for single taxpayers and $24,000 for married couples filing jointly), many taxpayers will have lower taxable incomes in 2018.
The Withholding Calculator is an excellent way to estimate a taxpayer's appropriate withholding amounts for 2018. If an individual needs to make an adjustment, it is best to do so early in the year rather than during October or November. It would be difficult to make the change at a later date and have it reflect the correct amounts.
While many taxpayers will find their tax returns simplified due to the higher standard deductions, some taxpayers will still decide to itemize. Those who plan to itemize their deductions should consider four substantial tax law changes in 2018.
If you desire to change your withholding amounts, contact your employer and complete a new IRS Form W-4. Because the average 2017 tax year refund was $2,800, many individuals who plan to use the new higher standard deductions may choose to reduce withholding and increase monthly income.
Published May 18, 2018