Federal Tax Withholding for 2018 – In late 2017 Congress passed a major tax bill which resulted in lower Federal taxes for many Americans. When we reviewed taxes with our 2017 clients, we offered the warning “don’t spend it, ’cause they will want it back”. In February of this year, the IRS changed their withholding tables and mostly reduced the amount of tax being withheld from paychecks. The intention was to reduce or eliminate any over payment in taxes you would normally have when filing your Federal taxes.
We believe that many people will end up owing tax this year due to this change – even those that normally would get a refund. There is an IRS web site “Check your withholding” where you can see how close you are to the correct amounts. Generally, as in the past, two couple earning households or individuals with stock options exercised and/or sold will have a harder time getting the correct amounts withheld. Here is a link to the IRS web site:
You will want to check this fairly soon so you have enough time before the end of the year to adjust your withholding. If you want to change your withholding, you will need to submit a new W-4 to your employer. Remember that on your W-4 withholding choices, zero exemptions will result in the higher withholding.
We can help you with this calculation but because of the time and knowledge necessary to recalculate your withholding, this work would be an additional charge this year. Please contact us if you wish us to take a look at this. We would need current pay stubs and information about any changes in your income this year.