Your paycheck is about to get bigger. The Treasury Department announced revisions to the 2018 withholding tables to reflect the massive tax changes Congress enacted late last year. These and other changes allow employers to use your W-4 form already on file to adjust the amount of tax withheld to reflect tax cuts in the new law. Sometime in February you will see your paycheck change.
According to Treasury officials, the new withholding tables have been adjusted to reflect the larger standard deduction, lower tax rates, and the repeal of the personal exemption.
But the tables couldn’t take into account changes that may affect you such as alternative-minimum tax, expanded child tax credit, or the repeal of deductions for state and local taxes.
Also, the new law impacts people differently and the results vary widely so the amount tax withheld from your paycheck this year will not necessarily match your tax bill next year.
ADVICE: You may want to advise your employer to maintain the same deductions for taxes as before. The amount of tax you withhold is entirely up to you. You may even want to do an analysis now on how the new law specifically impacts you and then decide if you need or want to change your withholdings. If you need more info on this contact us, if you are a client and we do your taxes, that analysis is already a part of our service to you.
If you have any questions or need help getting ready for these changes, give us a call at Hersman & Associates at 304-372-3400.