Nothing Is Certain, But Death and LESS Taxes… | Texas Benefit Consultants
On January 11, 2018, the Internal Revenue Service released its income tax withholding tables for 2018 reflecting changes made by the December 2017 tax reform legislation. The updated withholding information provides the new rates for employers to use during 2018. Employers are encouraged to use these tables as soon as possible but must use them by no later than February 15, 2018. Employers should continue to use the 2017 withholding tables until they implement the 2018 withholding tables.
According to the U.S. Treasury, an estimated 90 percent of paycheck recipients are likely to see an increase in their take-home pay by February. However, when employees see these changes in their paychecks depends on how quickly the new tables are implemented by their employers and how often they are paid (usually weekly, biweekly, or semimonthly).
To help individuals identify the correct amount of withholding, the IRS is releasing a revised withholding calculator by the end of February, which will be posted on IRS.gov. The IRS encourages taxpayers to use the calculator to adjust their withholding once it is released.
Changes for 2018 and Looking Forward
The new law makes many changes for 2018 that affect individual taxpayers, including an increase in the standard deduction, repeal of personal exemptions, and changes in tax rates and brackets. In relation to Form W-4, these new withholding tables are designed to work with employees’ current W-4, as filed with their employer; so, there are no steps employees must currently take regarding the new tables and law.
The IRS is also working on revising the Form W-4 to reflect the newly available itemized deductions, increases in the child tax credit, the new dependent credit, and repeal of dependent exemptions. However, there is no set release date for the revised form.
Once released, employees may use the new Form W-4 to update their withholding in response to the new law or changes in their personal circumstances in 2018, and by workers starting a new job. Until a new Form W-4 is issued, employees and employers should continue to use the 2017 Form W-4.
At this time, employers should be reviewing these new tables and implementing necessary changes. For 2019, the IRS has said that it anticipates making even more changes involving withholding. But don’t despair; the agency provides FAQs, which employers and employee may find useful, and pledges to work with the business and payroll community to encourage workers to file new Forms W-4 next year while sharing information on changes in the new tax law that impact withholding.
Stay tuned though, because 2018 has only just begun.
By Samantha Yurman
Originally published by www.ThinkHR.com