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IRS releases updated tax withholding calculator and new Form W-4

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One of the most consequential developments of 2018 – for both businesses and individuals – was the passage of the Tax Cuts and Jobs Act.

This bill – signed by the president at the end of last year – increases the standard deduction, removes personal exemptions, increases the child  tax credit, limits or discontinues certain deductions, and of course, changes the tax rates and brackets themselves.

When tax reform became law, the first action taken by the IRS occurred in January, when the agency released new withholding tables. These tables were designed to avoid under- and over-withholding of tax for those with simpler tax situations (see CheckWriters implements new withholding tables following IRS release for more information).

Now, the IRS has released a new tax withholding calculator to give employees the information needed to complete a new Form W-4, which they can submit to their employer if they choose to adjust their withholding.

Acting IRS Commissioner David Kautter said in statement that the IRS “encourages employees to check their paychecks to help ensure they’re having the right amount of tax withheld for their personal situation.”

Employers should note, however, that employees are not required to submit new Forms W-4, as the withholding tables were adjusted to function with the prior version of the Form W-4 for 2018.

Nonetheless, the IRS is encouraging employers to notify their employees of the option to check and adjust their withholding. This could help employees avoid an unexpected tax bill or penalty at tax time in 2019 or prevent too much tax from being withheld.

Click here for the new withholding calculator >

Click here for the new Form W-4 >

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