It’s not too late for wage-earners to review their withholding allowances claimed on IRS Form W-4 to avoid a possibly unpleasant surprise when filing their 2018 tax return in early 2019. The number of withholding allowances can be adjusted, and/or additional federal income taxes can be voluntarily withheld from remaining 2018 paychecks, to more closely match the anticipated tax liability for the 2018 year.
Although there were favorable changes in the 2017 year-end Tax Cuts and Jobs Act for individuals (e.g., increase in standard deduction and cuts in tax rates), the IRS also subsequently tweaked the withholding tables to reduce federal withholding and increase take-home pay, which could leave wage earners under withheld. The IRS has published a helpful “Withholding Calculator,” which can be found at https://www.irs.gov/individuals/irs-withholding-calculator, to assist taxpayers.
For more information, please contact Tom Hammerschmidt in the Firm’s Ann Arbor office at 734-623-1602, or any of the Firm’s tax specialists located in our Dickinson Wright U.S. offices.