Paycheck Checkup
Like most working Americans, when we start a new job, we complete a Form W-4 to direct our payroll withholdings for federal income taxes. Unless we have a life-changing event such as marriage or children, we don’t give it another thought about our withholdings. We become complacent with whatever the bottom line is on our income tax returns and life goes on.
However, with the recent enactment of the Tax Cuts and Jobs Act earlier this year, we need to be proactive rather than complacent (and ultimately reactive in early 2019) about our withholdings and what our bottom line will look like for 2018. The refund you are accustomed to receiving may not be there for 2018.
Some changes to keep in mind:
- No longer are there personal exemptions, rather there is a larger standard deduction based upon filing status.
- There is a cap on the deduction for state and local property, income and/or sales tax if you itemize deductions.
- Certain deductions such as tax preparation expenses unreimbursed business expenses and moving expenses have been eliminated.
- Deduction of interest on home equity loans has been repealed.
- Alimony payments have been affected.
To ensure that you are not faced with an unexpected tax bill, the IRS has provided a calculator on their website (www.irs.gov) called “Paycheck Checkup” which is available to taxpayers to estimate whether adequate withholding amounts are in place.
Don’t be surprised – do a Paycheck Checkup today.
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