Two-Income Families, Taxpayers working Multiple Jobs Should Check Withholding Amount
WASHINGTON - The Internal Revenue Service urges two-income families and those who work multiple jobs to complete a "paycheck checkup" to verify they are having the right amount of tax withheld from their paychecks.
The IRS Withholding Calculator can help them navigate the complexities of multiple employer tax situations and determine the correct amount of tax for each of their employers to withhold.
The passage of the Tax Cuts and Jobs Act, which will affect 2018 tax returns that people file in 2019, makes checking withholding amounts even more important. These tax law changes include:
If a taxpayer needs to adjust their paycheck withholding amount, doing so earlier gives more time for withholding to take place evenly throughout the year. Waiting means there are fewer pay periods to make the tax changes - which could have a bigger effect on each paycheck.
The tax law changes generally don't affect 2017 returns that people are filing in 2018. The changes affect 2018 returns, which taxpayers will file in 2019.
The Withholding Calculator is the easiest, most accurate way for taxpayers with these complicated tax situations to determine their correct withholding amount. The tool allows users to enter income from multiple jobs or from two employed spouses. It also ensures that these taxpayers apply their 2018 tax deductions, adjustments and credits only once - rather than multiple times with different employers.
The calculator will recommend how to complete a new Form W-4 for any or all of their employers, if needed. If a couple or taxpayer is at risk of being under-withheld, the calculator will recommend an additional amount of tax withholding for each job. Taxpayers can enter these amounts on their respective Forms W-4.
To use the Withholding Calculator, taxpayers should have their 2017 tax returns and most recent pay stubs available.
The calculator doesn't request personally identifiable information, such as name, Social Security number, address or bank account numbers. The IRS does not save or record information entered in the calculator. Taxpayers should watch out for tax scams, especially via email or phone, and be especially alert to cyber criminals impersonating the IRS. The IRS doesn't send emails related to the calculator or the information entered.
Withholding Calculator results depend on the accuracy of information entered. Taxpayers whose personal circumstances change during the year should return to the calculator to check whether their withholding should be adjusted.
Employees who need to complete a new Form W-4 should submit it to their employers as soon as possible. Employees with a change in personal circumstances that reduce the number of withholding allowances must submit a new Form W-4 with corrected withholding allowances to their employer within 10 days of the change.
As a general rule, the fewer withholding allowances an employee enters on Form W-4, the higher their tax withholding. Entering "0" or "1" on line 5 of the W-4 means more tax withheld. Entering a larger number means less tax withholding, resulting in a smaller tax refund or potentially a tax bill or penalty.
Please call us for more information on what your current withholding should be.
Mia Verc CPA, Janice Papais CPA & Arthur Bradley CPA
Monarch Accounting Group, Inc.
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