THE new tax law could have an impact on how much your employer should withhold from your paycheck. Too little withholding from your paycheck could mean large unexpected tax bill as you file your tax return in 2019 for Tax Year 2018.
If you have not done so, it is time to have a paycheck check up to avoid having too little and too much withholding. Do you need a paycheck check-up? If you are unsure, do it anyway.
• Paycheck checkup: You may want to consider to run paycheck check-up if you have enough withholding from your pay or income if you are in any of this category: 1) you are a family with two income, 2) you work more than two jobs, 3) you work for part of the year, 4) in the past you either have large tax bill or large tax refund, 5) your tax return is complex, 6) you are considered high income taxpayer , 7) itemizes deduction, 8) you have children who claims child tax credit in the past, 9) you have older dependents including children with age at least 17 or older.
Remember that as you file in 2019 for your 2018 tax return, you have no more personal exemptions, there is an increase in standard deduction, there is a limited deduction and you can no longer claim some of the deductions, and the tax rates and tax brackets changed.
• Withholding calculator: It is time to visit the IRS website. The IRS have withholding calculators in their website to help estimate your 2018 income tax. The withholding calculator compares your current tax withholdings and helps you decide if you need to change your withholding with your employer. Visit https://apps.irs.gov/app/withholdingcalculator/. TIPS: Have the following information available as you process the withholding calculator: current paystubs, 2017 Form 1040, list the changes in your 2018 tax situation and calculate a full-year impact, and have these changes reflected in the withholding calculator as you provide information.
The IRS does not save your record as you enter information in the calculator. Your personal information is NOT also required like SSN, address, or bank account numbers.
• How to change withholding: Utilize the result from the withholding calculator in completing the new Form W-4 Employees Withholding Allowance Certificate and submit to your employer as soon as possible.
• If you have more concerns and questions: It is important to visit your tax professional on or before the last quarter of 2018 to avoid surprises in your tax bill.
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Disclaimer: Any accounting, business or tax advice contained in this communication is neither intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.
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Al-os & Associates Accountancy Corporation provides accounting and tax services to individuals, corporations, LLCs and business entities. The Firm has a niche in defending taxpayers audited by the IRS and other governmental agencies.
