IRS Encourages Workers to Get a “Paycheck Checkup”
Following major tax reform in December 2017, the Internal Revenue Service (IRS) is asking employers to remind workers that a “paycheck checkup” might be necessary to make sure they have the right amount of tax taken out of their paychecks. The new tax law could affect how much tax someone should have their employer withhold from their paycheck. Having too little tax withheld could mean a tax bill or a penalty at tax time next year.
And with the average refund topping $2,800, the IRS notes that some workers may prefer to get more money in their paycheck now. Grab a copy of your last tax return and check the IRS Withholding Calculator today! The earlier you check, the more time you have for withholding changes to take place evenly. Waiting until later in the year means there are fewer pay periods to make the tax changes – which could have a bigger impact on each paycheck.
Encourage employees to use the Withholding Calculator to estimate their 2018 income tax. The Withholding Calculator compares that estimate to their current tax withholding and can help them decide if they need to change their withholding with their employer. When using the calculator, it’s helpful to have a completed 2017 tax return available.
Employees can use the results to determine if they need to adjust their withholding and submit a new Form W-4, Employee’s Withholding Allowance Certificate to their employer.
“The IRS is taking special steps to help taxpayers understand these tax law changes,” said Acting IRS Commissioner David Kautter, in a statement. These include a series of plain language Tax Reform Tax Tips, such as Step-by-Step Instructions for Using the IRS Withholding Calculator.
There are also a set of YouTube videos to help people understand how important it is to check their withholding and what they need to do:
Who Needs a Paycheck Checkup?
The IRS always recommends employees check their withholding at the beginning of each year or when their personal circumstances change to make sure they’re having the right amount of tax withheld from their paychecks. With the new tax law changes, it’s especially important for certain people to make sure they have the right amount of withholding.
The new law makes a number of changes that affect individual taxpayers, including:
- Increasing the standard deduction;
- Removing personal exemptions;
- Increasing the child tax credit;
- Limiting or discontinuing certain deductions; and
- Changing the tax rates and brackets.
Among the groups who should check their withholding are:
- Two-income families.
- People working two or more jobs or who only work for part of the year.
- People with children who claim credits such as the Child Tax Credit.
- People with older dependents, including children age 17 or older.
- People who itemized deductions in 2017.
- People with high incomes and more complex tax returns.
- People with large tax refunds or large tax bills for 2017.
- People with changed personal circumstances, such as divorce, or a child no longer being a dependent.