The Internal Revenue Service has released updated versions of its Withholding Calculator and Form W-4, following passage of the Tax Cuts and Jobs Act in December.  These tools will help employees ensure they have the right amount of tax taken out of their paychecks after the law changed.  While passage of the Tax Cuts and Jobs Act will not impact the filing of 2017 tax returns, it could have impacts on the filing of 2018 returns.

Employees are encouraged to use the Withholding Calculator to ensure that they aren’t faced with an unexpected tax bill for having too little tax withheld from their paychecks over the course of the year.  Employees who use the Calculator and determine that they are withholding more than necessary may also decide to adjust their withholdings to ensure that they receive more each pay period.  

While all employees are encouraged to do a quick “paycheck checkup,” the agency notes that the following categories of employees may be impacted by the Tax Cuts and Jobs Act’s changes such that updating their withholdings is necessary:

• Two-income families.
• People with two or more jobs at the same time or who only work for part of the year.
• People with children who claim credits such as the Child Tax Credit.
• People who itemized deductions in 2017.
• People with high incomes and more complex tax returns.

If changes to withholding are necessary, the Withholding Calculator gives employees the information they need to fill out a new Form W-4 for submission to the company.

“Withholding issues can be complicated, and the calculator is designed to help employees make changes based on their personal financial situation,” said Acting IRS Commissioner David Kautter said in a statement. “Taking a few minutes can help taxpayers ensure they don’t have too little – or too much – withheld from their paycheck.”

For more information, the IRS has published a Withholding Calculator Frequently Asked Questions resource.