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Summer hours are in effect: Our offices close at NOON on Fridays from May 17th to July 12th
Our offices will be closed the week of Thanksgiving, from November 25th through November 29th, to support our team’s well-being and allow time with family.
We will resume our fall/winter business hours on Monday, December 2nd. Thank you for your understanding, and we wish you a wonderful holiday season.
Summer hours are in effect: Our offices close at NOON on Fridays from May 17th to July 12th
Our offices will be closed the week of Thanksgiving, from November 25th through November 29th, to support our team’s well-being and allow time with family.
We will resume our fall/winter business hours on Monday, December 2nd. Thank you for your understanding, and we wish you a wonderful holiday season.
A taxpayer’s annual tax liability is based on numerous personal circumstances and life events. For wage-earning taxpayers, federal income tax is paid when income is received via paycheck withholdings. In general, taxpayers are encouraged to update paycheck withholding allowances (Form W-4) to account for significant life changes (e.g., increase in wages, the number of dependents, changes in marital status).
Tax reform created an additional reason to review paycheck withholdings: Confirm how the new laws impact your personal circumstances and preferences.
Tax reform lowered and broadened income tax brackets, doubled the standard deduction and eliminated personal exemptions. The IRS subsequently updated income tax withholding tables, one of the guidelines employers use to determine how much to retain for taxes from employee paychecks. The amount withheld is further customized by an employee’s W-4.
In many cases, employer withholding amounts went down, enabling employees to enjoy slightly higher paychecks; yet many Americans left their W-4s unchanged. Consequently, many W-2 wage earners have found themselves under-withheld for the 2018 tax year. Fortunately, the
IRS waived the penalty for many taxpayers who paid at least 80% of their total tax liability.
The IRS shared that it is “especially important” that certain groups with more “complicated financial situations” should check their withholdings.
These include:
• Two-income families.
• People working two or more jobs or who only work for part of the year.
• People with children who claim credits such as the Child Tax Credit.
• People with older dependents, including children age 17 or older.
• People who itemized deductions in the prior tax year.
• People with high incomes and more complex tax returns.
• People with large tax refunds or large tax bills in the prior years.
It is important to note that receiving a refund or owing taxes does not indicate that your overall annual tax liability has increased or decreased. Your effective tax rate, or the percentage of your annual total income paid in federal income tax, often provides a clearer comparison.
Please consult with your tax professional to learn more about your specific tax rate and identify if adjustments should be made to your withholdings for the current tax year.
Article was updated on 3/22/19 to reflect the IRS expansion of the penalty waiver.