One of the most often heard Congressional talking points for the Tax Cuts and Jobs Act (TCJA) was that millions of workers would see an increase in their take home paychecks. To this end, on Thursday, the IRS issued new wage withholding guidelines. The guidelines are needed so employers can calculate how much tax to withhold from employees’ pay.
Employees should begin seeing changes in their paychecks by February 15th (or sooner) since it normally takes about a month to update systems. Employers should refer to the newly issued IRS Notice 1036 (https://www.irs.gov/pub/irs-prior/n1036–2018.pdf) to see the new developments. Businesses that use a payroll provider such as ADP or Paychex should check with their representative to find out when their employees will see the changes.
Although there is nothing for employees to do now, the IRS will be releasing a new online calculator next month to figure proper withholding. IRS officials have said that most Americans with simple tax returns are likely to get accurate checks next month. However, those who itemize their deductions will most likely need the online tool to be sure they are not underpaying or overpaying their taxes.
In the hurry to implement the new withholding, the IRS is asking companies to rely on out of date W-4 forms to calculate the withholding while using the new amounts listed in Notice 1036. The IRS is working on more detailed withholding information, which will be available soon in Publication 15 and related publications. In addition, the IRS is working on revising the Form W-4 to more fully reflect the new law and providing taxpayers information to determine whether they need to adjust their withholding.
In the meantime, if you have any questions, please call your trusted Wiss Advisor at 973-994-9400 or email@example.com for more details.