Among many other changes, the recently passed Tax Cuts and Jobs Act increased the standard deduction, removed personal exemptions, increased the child tax credit, limited or discontinued certain deductions, and changed the tax rates and brackets. To help account for these new changes to the individual income tax the Internal Revenue Service has issued a new 2018 Form W-4, Employee’s Withholding Allowance Certificate.
The IRS explained that certain taxpayers would be more likely to have a change in their tax situation necessitating filing a new Form W-4 with their employers, including two-income families, taxpayers with two or more jobs or who work only part of the year, taxpayers with children who will claim credits such as the child tax credit, and taxpayers who itemized deductions in 2017.
Incorrect deductions for withholding can lead to taxes due or excessive refunds when individual income tax returns are filed. Employees wanting to update their deductions and employers hiring new employees should use this new 2018 form to get the most accurate withholding.
Next Step Blog
Our blog is intended as a tool to keep people informed about relevant tax and accounting issues. If you have a question or an idea for a post, let us know!