I recommend all employers require their employees to complete a new W-4 form for federal withholding taxes and to make this information available to them.
The IRS encourages everyone to use the Withholding Calculator to perform a quick “Paycheck Checkup”. This is important because of the recent tax law for 2018.
There are several reasons to check your withholding:
- You protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time next year.
- With the average refund exceeded $2,800, you may prefer to have less withheld up front and receive more in your paychecks.
The IRS has a Withholding Calculator to assist taxpayers to complete the new W-4 form that has been revised for the new tax law. The calculator will ask you to estimate values of your 2018 income, the number of children you will claim for the Child Tax Credit and Earned Income Tax Credit, and other items that will affect your 2018 taxes. This process will take a few minutes.
- Gather your most recent pay stubs.
- Have your most recent income tax return handy; a copy of your completed Form 1040 will help you estimate your 2018 income and other characteristics to speed the process.
- Keep in mind that the Calculator’s results will only be as accurate as the information you provide. If your circumstances change during the year, come back to this Calculator to make sure that your withholding is still correct.
- The Withholding Calculator does not ask you to provide sensitive personally-identifiable information like your name, Social Security number, address or bank account numbers. The IRS does not save or record the information you enter on the Calculator.
IMPORTANT NOTE: This Withholding Calculator works for most taxpayers. People with more complex tax situations should use the instructions in Publication 505, Tax Withholding and Estimated Tax, expected to be updated in early spring. This includes taxpayers who owe self-employment tax, alternative minimum tax, the tax on unearned income of dependents or certain other taxes, and people with long-term capital gains or qualified dividends.
To Change Your Withholding:
- Use your results from this Calculator to help you complete a new Form W-4, Employee’s Withholding Allowance Certificate, and
- Submit the completed Form to your employer as soon as possible. Withholding takes place throughout the year, so it’s better to take this step as soon as possible.
Special Note for 2019: If you follow the recommendations at the end of this Calculator and change your withholding for 2018, the IRS reminds you to be sure to recheck your withholding at the start of 2019. This is especially important if you reduce your withholding sometime during 2018. A mid-year withholding change in 2018 may have a different full-year impact in 2019. So if you do not file a new Form W-4 for 2019, your withholding might be higher or lower than you intend. To help protect against having too little withheld in 2019, we encourage checking your withholding again early in 2019.
If you have additional questions about your withholding, consult your tax advisor.