Taxes has certainly been a topic of interest this year. For taxpayers, it’s time to look ahead and be aware of how income and deductions will affect next year’s taxes. With the massive overhaul of the U.S. tax code that just took place, your employees likely have many questions and concerns about how the changes will affect them.
Some examples of this year’s biggest changes to the U.S. tax code include:
- Reduction of tax percentage rates for all brackets, individuals and couples
- Elimination of personal exemption and expanded Child Tax Credit
- Adjustments to mortgage interest, charitable contribution and medical expenses deductions
- Limitation of the SALT deduction
- Elimination of “no health insurance” penalty
- Cuts to corporate tax rates
- New pass-through small business deduction
For more information on the tax law updates, the IRS Tax Reform page offers links to guidance on a wide range of issues related to the Tax Cuts and Jobs Act passed late last year.
IRS Withholding Calculator
The IRS is encouraging taxpayers to make use of its Withholding Calculator because of the recent tax law changes. The calculator helps estimate taxes for the year to ensure that the correct amount of tax is being withheld from paychecks and to help recalculate deductions that might have been updated since the 2017 tax season.
Checking withholding can help your employees protect themselves against unexpected tax bills or penalties. It can also help taxpayers establish their preferred amount of tax withholding.
To complete a 2018 withholding estimate using the IRS Withholding Calculator, the following documents are needed:
- Recent pay stubs
- Most recent income tax return
- Copy of completed Form 1040
While the Calculator works for most taxpayers, some filers with more complicated tax situations may need to visit the IRS website for further instructions.
New Changes to State Taxes
Taxpayers using the calculator to estimate their tax withholding should be aware of any updates to state taxes as well.
California is among several states proposing changes to their own tax laws to try to blunt the impact of things like the federal tax law’s cap on the amount of state taxes that can be deducted. The state senate has proposed a plan to replace state-tax deductions with a charitable donation. Up-to-date information can be found on individual state government websites.
SBS Payroll Can Help
For SBS Payroll clients, help with navigating changes to the tax code is all part of the package. Our experts, along with access to state-of-the-art tax management technology, keep SBS Payroll clients up-to-date and in compliance, no matter how things change. That means more time for them to help their own employees and clients navigate the changes. Even in tax season, that’s what is known as a win-win.Contact Us to Learn More about SBS Payroll & HR Services Today