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The IRS has released the updated 2018 federal income tax withholding tables reflecting the recent tax reform. This is the first of several updates that will be released in the next few weeks.
The updated withholding information, now posted online (click here to view the new tables), shows the new rates for employers to use for computing employee withholding amounts. Employers are requested to begin using the 2018 withholding tables as soon as possible, but not later than February 15, 2018. They should continue using the 2017 withholding tables until they have fully implemented the new 2018 withholding rules.
When employees will see the changes in their paychecks will vary depending on how quickly their employers implement the new tables, and how often they are paid — generally weekly, biweekly or monthly. Most employees will begin seeing paycheck increases in February.
The new withholding tables are designed to work with the Forms W-4 that workers should have already filed with their employers to claim withholding allowances. Employees do not have to do anything at this time.
Acting IRS Commissioner David Kautter says the IRS will be providing more information in the next several weeks to help employers and individuals understand and review the withholding changes and the other tax reform affecting payrolls and paychecks. Kautter explains the new tax withholding tables are designed to produce the correct tax withholding amount for taxpayers with simpler tax situations. He says the revisions are also aimed at avoiding income tax over- and under-withholding as much as possible. Soon the IRS will release additional updated information for taxpayers with more complicated tax plans.
Meanwhile, the IRS is working on revising its online withholding tax calculator to reflect the new tax law data and expects the calculator will be available by the end of February. A revised Form W-4 is also being developed. Both the Form W-4 and the online calculator will estimate the effect of changes such as itemized deductions, child tax credit increases, the new dependent credit and the repeal of dependent exemptions. These tools may be used by employees wishing to update their withholding in response to new tax reform law, to reflect changes in their personal circumstances in 2018, and by workers starting a new job.
If you have any questions, please don’t hesitate to contact us at McRuer CPAs online or call us at 816.741.7882.
