IRS Issues New Tools for 2018 Tax Withholding
HIGHLIGHTS
- The IRS has issued three new tools for 2018 tax withholding.
- The updates reflect changes made by a tax reform law enacted in 2017.
- Employers must use the new tables but do not have to use the new Form W-4 for 2018.
- An updated calculator allows taxpayers to check withholdings.
IMPORTANT DATES
- February 15, 2018: Deadline for employers to use the new 2018 withholding tables.
- February 28, 2018: The IRS issued a new withholding calculator for 2018 and an updated Form W-4 for 2019.
OVERVIEW
As of Feb. 15, 2018, employers must use new tables to determine how much income tax to withhold from their employees’ paychecks. The Internal Revenue Service (IRS) issued the required new tables in Notice 1036 on Jan. 9, 2018. The new tables are also available in IRS Publication 15.
In addition, the IRS issued a new Form W-4 and a new withholding calculator on Feb. 28, 2018.
The updated tools aim to help employers improve the accuracy of their tax withholdings under changes made by the tax reform law, the Tax Cuts and Jobs Act, which was enacted on Dec. 22, 2017.
ACTION STEPS
Employers should already be using the new tables for 2018. Employers are not required to use the new Form W-4 for 2018 but may use it for any 2018 withholding changes. Employers will be required to use the new version of Form W-4 for 2019.
Taxpayers can use the updated tax withholding calculator to determine whether they should make any changes to their 2018 withholdings.
