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Hey, why did my paycheck go up?

Hey, why did my paycheck go up?

Mar 23, 2018

If you receive a paycheck, you might have noticed that your post-February 15, 2018 paychecks are larger than before. As a result of the Tax Cuts and Jobs Act (TCJA), the federal income tax withholding tables have been adjusted, generally resulting in less withholding and bigger paychecks. This could cause problems if you are set up with safe harbor estimates for 2018 and your withholding is assumed to be the same as it was in 2017. This could also cause problems if your individual situation results in you owing more, rather than less, tax for 2018 under the new law, and you would rather not write a check when you file your return in April.

 

The IRS has released an updated version of Form W-4 (Employee's Withholding Allowance Certificate) and its online withholding calculator. These tools allow taxpayers to check their 2018 tax withholding. The IRS is encouraging taxpayers to perform a quick "paycheck checkup" to make sure sufficient tax is being withheld from their paychecks. This is particularly important for (1) two-income families, (2) people with two or more jobs at the same time or who work for only part of the year, (3) people with children who claim credits (such as the child tax credit), (4) people who itemized deductions in 2017, and (5) people with high incomes and more complex tax returns. The revised withholding calculator can be accessed at www.irs.gov/individuals/irs-withholding-calculator.

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Christenson_Crystal
Crystal Christenson, CPA, MST
Partner
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