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New Form W4 & Calculator 28 Feb 2018, 6:01 am
Updated Withholding Calculator, Form W-4 Released; Calculator Helps Taxpayers Review Withholding Following New Tax Law
WASHINGTON – The Internal Revenue Service today released an updated Withholding Calculator on IRS.gov and a new version of Form W-4 to help taxpayers check their 2018 tax withholding following passage of the Tax Cuts and Jobs Act in December.
The IRS urges taxpayers to use these tools to make sure they have the right amount of tax taken out of their paychecks.
“Following the major changes in the tax law, the IRS encourages employees to check their paychecks to help ensure they’re having the right amount of tax withheld for their personal situation,” said Acting IRS Commissioner David Kautter.
“Following the major changes in the tax law, the IRS encourages employees to check their paychecks to help ensure they’re having the right amount of tax withheld for their personal situation,” said Acting IRS Commissioner David Kautter.
The Tax Cuts and Jobs Act made changes to the tax law, including increasing the standard deduction, removing personal exemptions, increasing the child tax credit, limiting or discontinuing certain deductions and changing the tax rates and brackets.
If changes to withholding should be made, the Withholding Calculator gives employees the information they need to fill out a new Form W-4, Employee’s Withholding Allowance Certificate. Employees will submit the completed W-4 to their employer.
“Withholding issues can be complicated, and the calculator is designed to help employees make changes based on their personal financial situation,” Kautter said. “Taking a few minutes can help taxpayers ensure they don’t have too little – or too much – withheld from their paycheck.”
The withholding changes do not affect 2017 tax returns due this April. However, having a completed 2017 tax return can help taxpayers work with the Withholding Calculator to determine their proper withholding for 2018 and avoid issues when they file next year.
Steps to Help Taxpayers: Do a “Paycheck Checkup”
The IRS encourages employees to use the Withholding Calculator to perform a quick “paycheck checkup.” An employee checking their withholding can help protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time in 2019. It can also prevent employees from having too much tax withheld; with the average refund topping $2,800, some taxpayers might prefer to have less tax withheld up front and receive more in their paychecks.
The Withholding Calculator can be used by taxpayers who want to update their withholding in response to the new law or who start a new job or have other changes in their personal circumstances in 2018.
As a first step to reflect the tax law changes, the IRS released new withholding tables in January. These tables were designed to produce the correct amount of tax withholding — avoiding under- and over-withholding of tax — for those with simple tax situations. This means that people with simple situations might not need to make any changes. Simple situations include singles and married couples with only one job, who have no dependents, and who have not claimed itemized deductions, adjustments to income or tax credits.
People with more complicated financial situations might need to revise their W-4. With the new tax law changes, it’s especially important for these people to use the Withholding Calculator on IRS.gov to make sure they have the right amount of withholding.
Among the groups who should check their withholding are:
- Two-income families.
- People with two or more jobs at the same time or who only work for part of the year.
- People with children who claim credits such as the Child Tax Credit.
- People who itemized deductions in 2017.
- People with high incomes and more complex tax returns.
Taxpayers with more complex situations might need to use Publication 505, Tax Withholding and Estimated Tax, expected to be available on IRS.gov in early spring, instead of the Withholding Calculator. This includes those who owe self-employment tax, the alternative minimum tax, or tax on unearned income from dependents, and people who have capital gains and dividends.
Plan Ahead: Tips for Using the Withholding Calculator
The Withholding Calculator asks taxpayers to estimate their 2018 income and other items that affect their taxes, including the number of children claimed for the Child Tax Credit, Earned Income Tax Credit and other items.
Take a few minutes and plan ahead to make using the calculator on IRS.gov as easy as possible. Here are some tips:
- Gather your most recent pay stub from work. Check to make sure it reflects the amount of Federal income tax that you have had withheld so far in 2018.
- Have a completed copy of your 2017 (or possibly 2016) tax return handy. Information on that return can help you estimate income and other items for 2018. However, note that the new tax law made significant changes to itemized deductions.
- Keep in mind the Withholding Calculator results are only as accurate as the information entered. If your circumstances change during the year, come back to the calculator to make sure your withholding is still correct.
- The Withholding Calculator does not request personally-identifiable information such as name, Social Security number, address or bank account numbers. The IRS does not save or record the information entered on the calculator. As always, watch out for tax scams, especially via email or phone calls and be especially alert to cybercriminals impersonating the IRS. The IRS does not send emails related to the calculator or the information entered.
- Use the results from the Withholding Calculator to determine if you should complete a new Form W-4 and, if so, what information to put on a new Form W-4. There is no need to complete the worksheets that accompany Form W-4 if the calculator is used.
- As a general rule, the fewer withholding allowances you enter on the Form W-4 the higher your tax withholding will be. Entering “0” or “1” on line 5 of the W-4 means more tax will be withheld. Entering a bigger number means less tax withholding, resulting in a smaller tax refund or potentially a tax bill or penalty.
- If you complete a new Form W-4, you should submit it to your employer as soon as possible. With withholding occurring throughout the year, it’s better to take this step early on.
More information
This spring and throughout the year, the IRS will be working closely with businesses as well as the tax and payroll communities to help educate the public about the new withholding guidelines and the Withholding Calculator.
For 2019, the IRS plans to make further changes involving withholding. The agency will work with businesses and the tax and payroll communities to explain and implement these additional changes.
More information is available in the special Withholding Calculator Frequently Asked Questions.
The post New Form W4 & Calculator appeared first on Payroll Tax People, LLC – Nationwide Tax Payment Solutions.
Federal Withholding Tables 12 Jan 2018, 7:47 am
WASHINGTON – Updated 2018 Withholding Tables Now Available; Taxpayers Could See Paycheck Changes by February.
The Internal Revenue Service today released Notice 1036, which updates the income-tax withholding tables for 2018 reflecting changes made by the tax reform legislation enacted last month. This is the first in a series of steps that IRS will take to help improve the accuracy of withholding following major changes made by the new tax law.
The updated withholding information, posted today on IRS.gov, shows the new rates for employers to use during 2018. Employers should begin using the 2018 withholding tables as soon as possible, but not later than Feb. 15, 2018. They should continue to use the 2017 withholding tables until implementing the 2018 withholding tables.
Many employees will begin to see increases in their paychecks to reflect the new law in February. The time it will take for employees to see the changes in their paychecks will vary depending on how quickly the new tables are implemented by their employers and how often they are paid — generally weekly, biweekly or monthly. The new withholding tables are designed to work with the Forms W-4 that workers have already filed with their employers to claim withholding allowances. This will minimize burden on taxpayers and employers. Employees do not have to do anything at this time.
“The IRS appreciates the help from the payroll community working with us on these important changes,” said Acting IRS Commissioner David Kautter. “Payroll withholding can be complicated, and the needs of taxpayers vary based on their personal financial situation. In the weeks ahead, the IRS will be providing more information to help people understand and review these changes.”
The new law makes a number of changes for 2018 that affect individual taxpayers. The new tables reflect the increase in the standard deduction, repeal of personal exemptions and changes in tax rates and brackets.
For people with simpler tax situations, the new tables are designed to produce the correct amount of tax withholding. The revisions are also aimed at avoiding over- and under-withholding of tax as much as possible. To help people determine their withholding, the IRS is revising the withholding tax calculator on IRS.gov. The IRS anticipates this calculator should be available by the end of February. Taxpayers are encouraged to use the calculator to adjust their withholding once it is released.
The IRS is also working on revising the Form W-4. Form W-4 and the revised calculator will reflect additional changes in the new law, such as changes in available itemized deductions, increases in the child tax credit, the new dependent credit and repeal of dependent exemptions.
The calculator and new Form W-4 can be used by employees who wish to update their withholding in response to the new law or changes in their personal circumstances in 2018, and by workers starting a new job. Until a new Form W-4 is issued, employees and employers should continue to use the 2017 Form W-4.
In addition, the IRS will help educate taxpayers about the new withholding guidelines and the calculator. The effort will be designed to help workers ensure that they are not having too much or too little withholding taken out of their pay.
For 2019, the IRS anticipates making further changes involving withholding. The IRS will work with the business and payroll community to encourage workers to file new Forms W-4 next year and share information on changes in the new tax law that impact withholding.
More information is available in the Withholding Tables Frequently Asked Questions.
The post Federal Withholding Tables appeared first on Payroll Tax People, LLC – Nationwide Tax Payment Solutions.
January Tax Updates 9 Jan 2018, 9:08 am
Federal
IRS Extends ACA Due Date
Forms 1095b/c now due to Individuals by March 2, 2018 The IRS announced on Dec. 22, 2017 that it has extended the 2018 due date for certain entities to provide 2017 health coverage information forms to individuals from January 31, 2018 to March 2, 2018. (IR-2017-209)
Impact of H.R. 1 Tax Law
Current Forms W-4 are Valid “The IRS is working to develop withholding guidance to implement the tax reform bill signed into law on December 22. We anticipate issuing the initial withholding guidance in January, and employers and payroll service providers will be encouraged to implement the changes in February. The IRS emphasizes this information will be designed to work with the existing Forms W-4 that employees have already filed, and no further action by taxpayers is needed at this time.” https://www.irs.gov/newsroom/irs-statement-withholding-for-2018
State
State Withholding Tax
Impact of Tax Law H.R. 1
Anticipate State Withholding updates if States prepare to copy the Federal Government and the IRS.North Dakota Delays Release of Withholding Updates for 2018 Effective Jan. 1, 2018, North Dakota’s 2017 Income Tax Tables will remain in effect.
The post January Tax Updates appeared first on Payroll Tax People, LLC – Nationwide Tax Payment Solutions.
IRS Extends ACA Due Date 22 Dec 2017, 7:56 am
WASHINGTON – The IRS announced today that it has extended the 2018 due date for certain entities to provide 2017 health coverage information forms to individuals. Insurers, self-insuring employers, other coverage providers, and applicable large employers now have until March 2, 2018, to provide Forms 1095-B or 1095-C to individuals, which is a 30-day extension from the original due date of Jan. 31. Insurers, self-insuring employers, other coverage providers, and applicable large employers must furnish statements to employees or covered individuals regarding the health care coverage offered to them. Individuals may use this information to determine whether, for each month of the calendar year, they may claim the premium tax credit on their individual income tax returns.
This 30-day extension is automatic. Employers and providers don’t have to request it. The due dates for filing 2017 information returns with the IRS are not extended. For 2018, the due dates to file information returns with the IRS are:
- Feb. 28 for paper filers
- April 2 for electronic filers
Because of these extensions, individuals may not receive their Forms 1095-B or 1095-C by the time they are ready to file their 2017 individual income tax return. While information on these forms may assist in preparing a return, the forms are not required to file. Taxpayers can prepare and file their returns using other information about their health coverage. They do not have to wait for Forms 1095-B or 1095-C to file.
More information is contained in Notice 2018-06. Also visit www.irs.gov/aca for more
The post IRS Extends ACA Due Date appeared first on Payroll Tax People, LLC – Nationwide Tax Payment Solutions.
ALERT: ACA 2015 PENALTY NOTICES 10 Nov 2017, 8:33 am
Action must be taken within 30 Days of Letter 226-J
View IRS Letter 226-J https://www.irs.gov/pub/notices/ltr226j.pdf
Letter 226-J is the initial Letter issued to Applicable Large Employers (ALEs) to notify them that they may be liable for an Employer Shared Responsibility Payment (ESRP). The determination of whether an ALE may be liable for an ESRP and the amount of the proposed ESRP in Letter 226-J are based on information from Forms 1094-C and 1095-C filed by the ALE and the individual income tax returns filed by the ALE’s employees.
What you need to do
- Read IRS Letter 226-J and attachments carefully. These documents explain the ESRP process and how the information received affects the computation.
- The Letter fully explains the steps to take if you agree or disagree with the proposed ESRP computation.
- Complete the response form (Form 14764) indicating your agreement or disagreement with the Letter.
- If you disagree with the proposed ESRP liability, you must provide a full explanation of your disagreement and/or indicate changes needed on Form 14765 (PTC Listing). Return all documents as instructed in the Letter by the response date.
- If you agree with the proposed ESRP liability, follow the instructions to sign the response form and return with full payment in the envelope provided.
You may want to
- Review the information reported on Forms 1094-C and 1095-C for the applicable year to confirm that the information filed with the IRS was accurate because the IRS uses that information to compute the ESRP.
- Keep a copy of the Letter and any documents you submit.
- Contact the IRS using the information provided in the Letter if you have any questions or need additional time to respond.
- Send the IRS Form 2848 (Power of Attorney and Declaration of Representative) to allow someone to contact the IRS on your behalf. Note that the Form 2848 must state specifically the year and that it is for the Section 4980H Shared Responsibility Payment. https://www.irs.gov/pub/irs-pdf/f2848.pdf
Answers to Common Questions
Why did I receive this Letter?
The IRS used the information you provided on Forms 1094/5-C and determined that you are potentially liable for an ESRP.
Where did the IRS get the information used to compute the ESRP?
The IRS used form 1094/5-C filed by the ALE and the individual income tax returns of your full-time employees to identify if they were allowed a premium tax credit.
Is this Letter a bill?
No, the Letter is the initial proposal of the ESRP.
What do I need to do?
Review the Letter and attachments carefully and complete the response form by the date provided.
What do I do if the information is wrong or I disagree?
Follow the instructions in the Letter to provide corrected information for consideration by the IRS. The IRS will reply with an acknowledgement Letter informing you of their final determination.
Do I have appeal rights?
Yes, the acknowledgement Letter that you receive will spell out all your rights, including your right to appeal.
Letter 226-J https://www.irs.gov/pub/notices/ltr226j.pdf
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ACA 4980H Assessments – IRS Letter 226J 6 Nov 2017, 8:19 am
New IRS guidance released on November 2, 2017 advises that Employer Shared Responsibility Assessments for tax year 2015, Section 4980H Employer Mandate Penalty under the Affordable Care Act (ACA), will be issued within the next few weeks.
IRS Letter 226J may be issued by the IRS informing ALEs of their potential liability for an Employer Shared Responsibility Payment for tax year 2015. The Letter will include Form 14765 “Employee Premium Tax Credit List” which provides details on full-time employees who were allowed the premium tax credit. If the employer has a discrepancy, Letter 226J will also include Form 14764 ESRP Response and provide details on actions the employer can take usually within 30 days of the issuance date.
If an employer fails to respond, the IRS will access the proposed amount shown in Letter 226J, and issue a Notice and Demand for Payment (Notice CP220J).
The post ACA 4980H Assessments – IRS Letter 226J appeared first on Payroll Tax People, LLC – Nationwide Tax Payment Solutions.
OASDI 24 Oct 2017, 8:28 am
Federal
Social Security Effective 2018, the Old-Age, Survivors and Disability Insurance (OASDI) taxable wage base increases to $128,700.
The post OASDI appeared first on Payroll Tax People, LLC – Nationwide Tax Payment Solutions.
October Tax Updates 15 Oct 2017, 9:25 am
Federal
Hurricane Maria Disaster Relief
IRS Allows Leave-Based Donations for Victims of Hurricane Maria
On October 6, the Internal Revenue Service approved Special Employer-Provided Leave-Based Donation Programs for victims of Hurricane Maria.
State
State Tax
Illinois Moves Up Filing Deadline for W-2’s
Due Jan. 31, Illinois employers must file state copies of Form W-2 under Section 100.7300 of the state Department of Revenue.
State Unemployment Tax
Wisconsin Releases 2018 New Construction Employer UI
Effective Jan. 1, 2018, New Construction Employers are to be assessed lower unemployment tax rates than during 2017.
The post October Tax Updates appeared first on Payroll Tax People, LLC – Nationwide Tax Payment Solutions.
September Tax Updates 15 Sep 2017, 9:36 am
State
State Unemployment Tax
Arkansas 2018 UI
Effective Jan. 1, 2018, Arkansas’s unemployment taxable wage base remains unchanged from 2017 for both experienced employers and new employers.Oregon 2018 Workers Compensation Payroll Assessment Rate
Effective Jan. 1, 2018, the Oregon workers’ compensation payroll assessment rate remains unchanged from 2017 at 2.8 cents an hour or part of an hour worked by each employee.South Dakota 2018 UI
Effective Jan. 1, 2018, South Dakota’s unemployment taxable wage base remains unchanged from 2017 at $15,000.Vermont 2018 UI Increases
Effective Jan. 1, 2018, Vermont’s unemployment taxable wage base will increase to $17,600.Wisconsin 2018 UI
Effective Jan. 1, 2018, the Wisconsin unemployment taxable wage base remains unchanged from 2017 at $14,000.The post September Tax Updates appeared first on Payroll Tax People, LLC – Nationwide Tax Payment Solutions.
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