TAX ALERT- Are your new 2018 withholdings sufficient to cover your tax liability?

In March of 2018 the IRS adopted new withholding tables for wages and retirement distributions. These tables were designed to adjust the withholdings for the new tax laws that will be effective for 2018. Unfortunately these withholding tables appear to be a “best guess” by the IRS on how the new tax law affects our clients.

IRS

Upon preparing several “withholding checkups” to determine if adjustments are required for our client’s withholding, we are finding that more often than not, the withholding is insufficient. This could result in amounts owed to the IRS next April when filing your tax returns (Oregon law is similar to prior years so likely not an issue with Oregon).

We have found that with “two earner” households, there seems to be under-withholding more frequently. The IRS has a very basic tool to check your withholding at the following link:

https://www.irs.gov/individuals/irs-withholding-calculator

The IRS also indicates at this link that taxpayers with more complex tax situations should use the instructions in Publication 505 to determine if withholding is accurate. The link to this publication is as follows:

https://www.irs.gov/pub/irs-pdf/p505.pdf

Because this is a fairly time consuming read, we offer our clients the service to check their withholding by asking some questions and having paystubs provided to us for estimating the full 2018 tax return including withholding. At this time we could recommend changes needed to your withholding.

For our clients that we do the practice accounting and taxes

  • If either spouse has a W-2 outside of the practice, it would be good to send us a copy of a most recent paystub.
  • If there is no W-2 outside of the practice, we already have figured your withholding such that the new tax law is applied to your tax situation….no need to request our office perform these services, we are already looking out for you under the new tax law.

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