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IRS Releases 2018 Form W-4, Updates Withholding Calculator

BY: APA Staff | 03/02/18

On February 28, the IRS released the 2018 Form W-4, Employee’s Withholding Allowance Certificate, and its updated Withholding Calculator. Both the form and the calculator have been updated to reflect changes in the tax law made by the Tax Cuts and Jobs Act (Pub. L. 115-97). Now that these tools are available, the IRS is suggesting that employees do a “Paycheck Checkup,” to check that they are having the correct amount of tax withheld from their paycheck.

Revised Form W-4

The new instructions explain how employees can claim exemption from withholding; suggest that employees use the tax calculator if they have a complex tax situation; and provide additional guidance to filers with multiple jobs or a working spouse, nonwage income, or are nonresident aliens.

The three worksheets used to determine the number of allowances to claim – Personal Allowance Worksheet; Deductions, Adjustments, and Additional Income Worksheet; and the Two-Earners/Multiple Jobs Worksheet – have all been updated. For instance, the Personal Allowance Worksheet includes information on the child tax credit and the credit for other dependents.

Withholding Calculator

In a press release announcing the release of the 2018 Form W-4 and the Withholding Calculator, IRS Commissioner David Kautter explained the importance of using these tools. “Withholding issues can be complicated, and the calculator is designed to help employees make changes based on their personal financial situation,” he said. “Taking a few minutes can help taxpayers ensure they don’t have too little – or too much – withheld from their paycheck.”

By working through the questions in the calculator, employees will learn if they should make changes in their withholdings. If changes are needed, the calculator gives employees the information they need to fill out a new Form W-4.

In depth coverage of the changes to the Form W-4 are included in Payroll Currently (Issue 3, Vol. 26).