2018 has seen the most changes to tax law since the 1980’s, and as a result, accountants everywhere are working hard to keep clients up to date. In order to mitigate confusion, the IRS has recently issued a memo to citizens regarding a specific provision of the law.
The CPA and Audit teams at Hall & Company want you to be in the know:
What’s Going On?
Last December’s tax reform law lowered taxes for the majority of the country by reclassifying brackets. However, it also doubled the deductions necessary for every income earner in a household. As a result, many businesses have lowered the tax withholding on their employees’ paychecks, and many taxpayers are now actually under-withholding. This means that people may receive a lower return than expected. Employees who have not updated their tax withholding with their employer to reflect these new changes risk having liability at the end of the season.
What Can I Do?
The IRS is urging taxpayers to do a “paycheck check-up” before the current tax season is over in order to make sure they avoid any unsavory surprises come the new year. They have put together a withholding calculator to help users find the right amount to set aside every pay period. In order to use the tool to its full potential, you should have last year’s tax return and your last few paystubs at the ready. Once completed, employees should give their employers a new W-4 as soon as possible, before the new year.
If you fall under the rule of this new law, it’s very important to make sure you file your new W-4 before your remaining pay periods are over. Not doing so will likely lead to you receiving a small return, or even owing money back to the government. Tax issues like this are announced by the IRS daily. It can be hard to stay on track with the latest news, laws, and regulations. That’s where Hall & Company can help. If you or your business would like a little peace of mind, it’s a great idea to hire a professional to handle your accounting needs. Give our Irvine office a call!