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    Updated 2018 Withholding Tables Now Available

    Updated 2018 Withholding Tables Now Available; Taxpayers Could See Paycheck Changes by February

    WASHINGTON — The Internal Revenue Service today released Notice 1036, which updates the income-tax withholding tables for 2018 reflecting changes made by the tax reform legislation enacted last month. This is the first in a series of steps that IRS will take to help improve the accuracy of withholding following major changes made by the new tax law.

    The updated withholding information, posted today on IRS.gov, shows the new rates for employers to use during 2018. Employers should begin using the 2018 withholding tables as soon as possible, but not later than Feb. 15, 2018. They should continue to use the 2017 withholding tables until implementing the 2018 withholding tables.

    Many employees will begin to see increases in their paychecks to reflect the new law in February. The time it will take for employees to see the changes in their paychecks will vary depending on how quickly the new tables are implemented by their employers and how often they are paid — generally weekly, biweekly or monthly. The new withholding tables are designed to work with the Forms W-4 that workers have already filed with their employers to claim withholding allowances. This will minimize burden on taxpayers and employers. Employees do not have to do anything at this time.
    “The IRS appreciates the help from the payroll community working with us on these important changes,” said Acting IRS Commissioner David Kautter. “Payroll withholding can be complicated, and the needs of taxpayers vary based on their personal financial situation. In the weeks ahead, the IRS will be providing more information to help people understand and review these changes."

    The new law makes a number of changes for 2018 that affect individual taxpayers. The new tables reflect the increase in the standard deduction, repeal of personal exemptions and changes in tax rates and brackets.
    For people with simpler tax situations, the new tables are designed to produce the correct amount of tax withholding. The revisions are also aimed at avoiding over- and under-withholding of tax as much as possible.

    To help people determine their withholding, the IRS is revising the withholding tax calculator on IRS.gov. The IRS anticipates this calculator should be available by the end of February. Taxpayers are encouraged to use the calculator to adjust their withholding once it is released.
    The IRS is also working on revising the Form W-4. Form W-4 and the revised calculator will reflect additional changes in the new law, such as changes in available itemized deductions, increases in the child tax credit, the new dependent credit and repeal of dependent exemptions.
    The calculator and new Form W-4 can be used by employees who wish to update their withholding in response to the new law or changes in their personal circumstances in 2018, and by workers starting a new job. Until a new Form W-4 is issued, employees and employers should continue to use the 2017 Form W-4.
    In addition, the IRS will help educate taxpayers about the new withholding guidelines and the calculator. The effort will be designed to help workers ensure that they are not having too much or too little withholding taken out of their pay.

    For 2019, the IRS anticipates making further changes involving withholding. The IRS will work with the business and payroll community to encourage workers to file new Forms W-4 next year and share information on changes in the new tax law that impact withholding.
    Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDR

    #2
    Already have my spreadsheets set up so I can do a quick calc when preparing returns if the new withholding will get them in trouble for 2018 file 2019 returns.

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      #3
      Originally posted by kathyc2 View Post
      Already have my spreadsheets set up so I can do a quick calc when preparing returns if the new withholding will get them in trouble for 2018 file 2019 returns.
      I believe IRS is going to have a new W4 calculator by Feb 15th.
      Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDR

      Comment


        #4
        Originally posted by ATSMAN View Post
        I believe IRS is going to have a new W4 calculator by Feb 15th.
        I prefer formulas set up to do my own analysis.

        If you look at Table 7 for annual payroll charts start as income over 2,300 for single and 8,650 for married. These numbers change to 3,700 and 11,550 for 2018. Even for 2017 these numbers don't seem to be to have any significance to me as to a relationship to standard deductions, but maybe I'm missing something???

        Comment


          #5
          Originally posted by kathyc2 View Post
          I prefer formulas set up to do my own analysis.

          If you look at Table 7 for annual payroll charts start as income over 2,300 for single and 8,650 for married. These numbers change to 3,700 and 11,550 for 2018. Even for 2017 these numbers don't seem to be to have any significance to me as to a relationship to standard deductions, but maybe I'm missing something???
          They won't make sense because they have had to fudge the withholding calculations using the 2017 W4 exemptions claimed.

          Comment


            #6
            Ah! Figured it out. For single the 2017 base of 2,300 is the standard deduction of 6,350 less personal exemption of 4,050. Not sure why they go at it that way, other than if TP has no income other than wage income that doesn't vary much during the year they will always have a refund. If they claim 1 on W4, the refund would work out to marginal rate x personal exemption of 4,050.

            The 2018 base of 3,700 is 1,400 higher than 2017. This comes from the amount without HR1 would have been 50 higher at 2,350 (6500 - 4150). Then they added 1,350 which is the difference of new 12,000 less 2018 amounts before of 10,650 (6500 + 4150).

            So, in the case of the simple return of standard deduction and only W-2 income, 2018 refunds will be slightly lower. For someone in 15% marginal refund of 607 (4,050 x .15) will go to 498 (4,150 x .12).

            Works out the same for married if you presume 2 exemptions.

            Comment


              #7
              I looked mostly at TP's that are currently in th 28% or lower bracket and have come up with the following:

              TP's that take standard deduction will have slightly lower refunds in 2018 due to new withholding tables.
              Those that itemize in 2017 but won't meet the higher threshold in 2018 will see a more significant reduction in refund.
              Most that claim child tax credit should see a higher refund in 2018, although some with 2017 itemized will see lower refund.

              TP's that are very close to break even on 2017 return and want to be assured of not having a balance due 2018 may want to look at changing exemptions on W4.
              Last edited by kathyc2; 01-13-2018, 10:16 AM.

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                #8
                THE TAX BOOK has a very good % method withholding tables (% method is where you do not have to worry about going off the chart). Does anyone know how to find it at the TTB website?

                Comment


                  #9
                  Originally posted by John of PA View Post
                  THE TAX BOOK has a very good % method withholding tables (% method is where you do not have to worry about going off the chart). Does anyone know how to find it at the TTB website?
                  The w/h tables and HR1 updates are here: https://www.thetaxbook.com/update_service_news.asp

                  Comment


                    #10
                    Notice 1036

                    Are these tables FINAL for use beginning immediately? (FINAL means no changes are known. They can, of course, change anything they want at some later date)

                    I have told my payroll customer to not expect any change in their withholding until February.

                    Comment


                      #11
                      link?

                      Can someone post a link to IRS website for the NEW updated withholding table. Or new updated Circular E.

                      I am just not finding it.

                      Thanks

                      Comment


                        #12
                        Thank you Kathy. It sounds like the Withholding Tables is something one would find in the "Industry News" part of the website.

                        Comment


                          #13
                          Originally posted by John of PA View Post
                          Thank you Kathy. It sounds like the Withholding Tables is something one would find in the "Industry News" part of the website.
                          That's all I can find, is articles about the New withholding tax tables. But where are they? Does anyone have a link to it?

                          Thanks

                          Comment


                            #14
                            Originally posted by nwtaxlady View Post
                            That's all I can find, is articles about the New withholding tax tables. But where are they? Does anyone have a link to it?

                            Thanks
                            https://www.irs.gov/pub/irs-pdf/n1036.pdf

                            Comment


                              #15
                              Thank you Kathy!

                              Will they be updating the Pub 15, Circular E? All I see is the one for use in 2017.

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