Withholding Calculator & Your 2018 Paycheck

Previously we talked about how the new tax reform will change your tax returns. In conjunction with the implementation of the new tax reform, the Internal Revenue Service also made changes to the withholding tax tables. This is meant to work in conjunction with the new tax rules to ensure that the correct amount of tax is withheld. This means that, if you do nothing, the amount of taxes withheld on your payroll has decreased, resulting in an additional $20 – $60 in your net take home pay.

But while most taxpayers will see a drop in their tax liability, some will not. Also, the decrease in your tax liability may or may not be equal to the decrease in the amount of tax withheld on payroll. To help taxpayers actively manage and anticipate their 2018 tax withholdings, the IRS has launched a new withholding calculator .

To use the calculator most efficiently and effectively, you should have the following information before starting:

  • Your most recent paystub; please be sure that this contains year to date figures
  • A copy of your 2017 tax returns

The calculator will not ask for any personally identifiable information or account information, and is only as accurate as the data entered. Only use the official IRS calculator, and avoid tax scams from cybercriminals impersonating the IRS.

If you determine that you should change your withholdings based on the results of running the calculator, you should obtain a new W4 . This should be given to your Human Resources department as soon as possible. Generally, the fewer withholding allowances on the W4, the higher your tax withholdings will be, and the less you will receive in your paycheck.

 

For those of you who receive non-salaried sources of income such as self-employment, pensions, annuities, social security, etc; or if you experience a life changing event, such as purchasing your own home, or welcomed a new addition, your tax projection for 2018 may be beyond the capabilities of the withholding calculator – please consult with your tax advisor to obtain an accurate projection based on your unique set of circumstances.

Posted by JitLeeBillings

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