The Tax Cuts and Jobs Act made major changes to the tax law. Because of this, you and your employees should do a paycheck checkup using the Withholding Calculator on IRS.gov and, if necessary, complete a new W-4 form. The calculator will help determine the right amount of withholding and can help prevent having too little (or too much) tax withheld.
Recent changes affecting withholding include:
- Reduced tax rates
- Elimination of personal exemptions
- Increased standard deductions: $12,000 for singles, $18,000 for heads of households and $24,000 for married couples filing jointly
- Increased child tax credit: $2,000 per qualifying child and a new $500 credit for other qualifying dependents
- Changes to itemized deductions
A paycheck checkup is especially important if you or your employees:
- Are a two-income family
- Have two or more jobs at the same time or who only work part of the year
- Claim credits like the child tax credit
- Have dependents age 17 or older
- Itemized deductions in 2017
- Have high income or a complex tax return
- Have a large tax refund or tax bill for 2017
For more information, please see IRS.gov/taxreform. For updated withholding tables, please visit the IRS newsroom and the IRS withholding table FAQs.
Blog information from the QuickBooks payroll team