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So, how much income tax should you withhold from your paycheck now that there have been changes to the rates for 2018 due to the Tax Cuts and Jobs Act?
The IRS has a new online Withholding Calculator to assist wage earners in determining the right amount of income tax to withhold from their paychecks. The calculator uses the updated rates and determines how many allowances an employee should claim on Form W-4. You may access this calculator by clicking on the following link: https://www.irs.gov/individuals/irs-withholding-calculator.
The IRS is encouraging everyone to use this new calculator for a quick “paycheck checkup”. However, taxpayers who itemize or claim child tax credits will likely feel the biggest impact from the new ACT. These taxpayers should visit the site to ensure they are prepared for the new changes and ensure they are withholding adequate amounts for 2018.
Also, there is a new Form W-4 for 2018 which factors in Itemized Deductions as well as a few other new areas. But, no need to complete these worksheets if you use the IRS Withholding Calculator.
We hope this information helps you in adapting to these changes for the current year.
Want proactive help tax planning in 2018? Call Morrison, Clark & Company CPAs, at 480-424-7855 and talk with one of our tax experts!