Check Withholding Now to Avoid Tax Surprises Later
With the year more than halfway over, the Internal Revenue Service urges taxpayers who haven’t yet done a “Paycheck Checkup” to take a few minutes to see if they are having the right amount of tax withholding following major changes in the tax law.
A summertime check on tax withholding is critical for millions of taxpayers who haven’t reviewed their tax situation. Recent reports note that many taxpayers could see their refund amounts change when they file their 2018 taxes in early 2019.
The Tax Cuts and Jobs Act, passed in December 2017, made significant changes, which will affect 2018 tax returns that people file in 2019. These changes make checking withholding amounts even more important. These tax law changes include:
- Increased standard deduction
- Eliminated personal exemptions
- Increased Child Tax Credit
- Limited or discontinued certain deductions
- Changed the tax rates and brackets
Checking and adjusting withholding now can prevent an unexpected tax bill and penalties next year at tax time. It can also help taxpayers avoid a large refund if they’d prefer to have their money in their paychecks throughout the year.
You can use the free IRS Withholding Calculator to check your withholding now.
Special Alert: Taxpayers who should check their withholding include those who:
- Are a two-income family.
- Have two or more jobs at the same time or only work part of the year.
- Claim credits like the Child Tax Credit.
- Have dependents age 17 or older.
- Itemized deductions in 2017.
- Have high income or a complex tax return.
- Had a large tax refund or tax bill for 2017.