The IRS has updated their income tax withholding tables due to the recent update in tax laws. Read more about how these changes could impact you.
Tax Withholding Changes
As a result of the tax law changes late last year, the IRS has published updated income tax withholding tables. Due to these changes, you might see that your net income has increased over the past month. While normally a good thing, this change could create a situation in which you owe the government money when filing your 2018 taxes.
In a previous article, I suggested getting a rough idea of how the tax changes may impact your bottom line. Now that the withholding tables have been changed, I think that getting an estimate of your 2018 tax obligation is even more important. Although CPAs are busily preparing clients’ taxes for 2017, waiting much longer to adjust your withholdings could create more work for you later in the year.
While nothing replaces the advice of your CPA, you could get a rough idea of your 2018 taxes by going here and then visiting the IRS withholding calculator to estimate your paycheck withholdings. You’ll want to compare your current withholdings to those in the calculator and, along with the advice of your CPA, determine if you should make any adjustments. The withholding calculator is best used by someone with a good handle on their taxes. Be sure to have your 1040 form and most recent paycheck with you when using the calculator.
The result of the tax changes may provide a reduction in taxes for many, but the timing and implementation of the changes are creating uncertainty. It could be that someone believes they have excess income throughout the year, spends that excess income, and winds up owing taxes next April. It could also be that someone doesn’t realize most of their tax benefit until filing in 2019 because they didn’t make the necessary adjustments in 2018. Of course, the government is hoping that everyone helps stimulate the economy sooner than later. I think it’s more important to get your 2018 tax plan in place as soon as possible to help ensure that you are not surprised by a tax bill come April 2019.
The opinions voiced in this material are for informational purposes only and are not intended to provide specific advice to any individual. This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
Friday, March 30th
Our office and US markets will be closed on Friday, March 30th for Good Friday. Have a great, long weekend!
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