Did You Know: You May Want to Change Your W-4 for 2018?
Did you know:
On January 29, 2018, the IRS issued Notice 2018-14 to provide additional federal income tax withholding guidance pending the release of the 2018 Form W-4. The IRS is currently revising Form W-4 to reflect changes made by the Tax Cuts and Jobs Act affecting individual taxpayers – such as changes in available itemized deductions, increases in the child tax credit, the new dependent credit, and the repeal of dependent exemptions. As a result, the 2018 Form W-4 is delayed.
Now that you know – here’s what it means!
The Act does not mandate that employees furnish new Forms W-4 for 2018. In order to minimize burden on employees and employers, the IRS and the Department of the Treasury designed the 2018 withholding tables to work with the Forms W-4 that employees have already furnished their employers.
The IRS is working on revising the withholding calculator on www.irs.gov to reflect the changes made by the new tax legislation. When released, the modified calculator and 2018 Form W-4 can be used by employees who wish to update their withholding in response to the new tax laws or changes in their personal circumstances in 2018.
Once the 2018 W-4 is released and withholding calculator are available, employees should review their individual circumstances and update their W-4 accordingly to avoid being in a situation where the amount of taxes being withheld are not sufficient.
The goal here, under any tax law, is to have your withholding to be as close to your actual tax liability as possible. That way you don’t have to worry about owing a lot or waiting for a big refund.
And here are the details:
The notice provides four purposes: 1) it extends the effective period of Forms W-4 for 2017 until February 28, 2018 and permits employees to claim exemptions for 2018 by temporarily using the 2017 form; 2) temporarily suspends the requirement that employees must furnish their employers with new forms W-4 within 10 days of changes in status that reduce the withholding allowances they are entitled to claim; 3) provides that the optional withholding rate on supplemental wage payments is 22% for 2018 through 2025; and 4) provides that, for 2018, withholding on periodic payments when no withholding certificate is in effect is based on treating the payee as a married individual claiming three withholding allowances.
Need help understanding how these changes will impact you or your business? Start Here.
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