The IRS has
recently advised two income families to make sure they are withholding the correct amount of taxes from their checks each month.
One reason
it is so important to do this now is because of the passage of the Tax Cuts and
Jobs Act, which is going to affect 2018’s tax returns . The act will change
many things about taxes, including:
l The standard deduction, which will be
increased
l Tax rates and tax brackets
l Personal exemptions, which will be
eliminated
l The child tax credit, which will be
increase
l Certain deductions, which will be
limited or discontinued
Because of
all of these changes and because of the complex nature of taxes for two income
families, people who fall into this category are a lot more likely to have too
much or not enough withheld from their paychecks, especially after all of these
changes to tax law.
For this
reason, it is very smart to check over your paycheck set-up and make sure you
are withholding the right amount. If you do need to adjust it, the sooner you
do it, the better. That way, it is more likely you can get your withholding
balanced out or at least mostly balanced out before tax time.
If you’re
not sure whether you’re withholding the right amount, use the IRS’s withholding
calculator, talk to the human resources department at your job, or visit with a
tax professional.
And, to put the change in action, complete a new W-4 and submit it to your employer. Bear in mind, when you do, that the fewer withholding allowances you have on this form, the higher your withholding.
And, if you
find all of this confusing or need help ensuring you’re doing everything right,
do not underestimate the help and expertise that a tax professional can bring
to the table.