Recently, the IRS issued updated income-tax withholding tables for 2018 to reflect changes made by the tax reform legislation enacted in December 2017. Precision Payroll’s tax software has been updated with the new rates, which became effective January 22.
The new withholding tables are designed to work with the W-4 forms that employees already have on file to claim withholding allowances, meaning that employees do not have to do anything at this time, says Patty Fritz, Executive Vice President of Operations.
“However, it would be a good time for employees to take a look at their exemptions and filing status, and make any changes on their W-4s for 2018,” she notes.
The new tables reflect the increase in the standard deduction, repeal of personal exemptions, and changes in tax rates and brackets.
The IRS is also working on revising the Form W-4 and providing a withholding calculator that 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,” says Fritz. “The IRS has indicated that both the new Form W-4 and the withholding calculator should be available by the end of February.”
For more information, please visit the IRS website at irs.gov. If you have any questions regarding this change, please feel free to contact your Payroll Specialist.