The Internal Revenue Service (IRS) has released the latest version of Form W-4, Employee’s Withholding Allowance Certificate, along with an updated Withholding Calculator.
The updates come on the heels of the Tax Cuts and Jobs Act, passed in December 2017. Some of the more prominent changes the Tax Cuts and Job Act has made to the tax law include:
- Increasing the standard deduction
- Removing personal exemptions
- Increasing the child tax credit
- Limiting or discontinuing certain deductions
- Changing the tax rates and brackets
Employees are encouraged to check their paychecks to ensure withholding amounts are accurate. Many employees complete a Form W-4 when they start a new job and never think about it again.
However, as personal and financial situations change, withholding amounts may need to be adjusted. Maintaining the same withholding amounts after getting married, having a baby, or picking up a second job may not make sense.
If employees need to make withholding changes, the IRS’ Withholding Calculator will give them the information they need to fill out a new Form W-4. An accountant or tax professional can also advise on the best course of action for each employee’s unique situation.
According to the IRS, withholding changes do not affect 2017 tax returns due this April.
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