The Internal Revenue Service is now working on the new Withholding Tables to adjust for the new Tax Act. The IRS says they are designing the tables to handle the fact that Personal Exemptions are no longer a deduction from income. As a result of the new withholding tables, you may see more money in your paycheck starting in February. This is due to the fact they will be withholding less money for your taxes. It is important to realize that any increase in your paycheck does not mean you received a tax cut, you may have, but, because of these new tables. If so, you will still owe those taxes at the end of the year.
People with two or more children should review their federal withholding from their pay stubs starting in February. People who reside in New Jersey or Maryland, states that have a high income tax and high real estate tax, should not ignore this change. The loss of the personal exemptions and the cap on the deduction for taxes on your return, may owe additional federal tax at year end. Those people will not want their federal withholding reduced.
If you notice a difference, please contact us. We will help you decide if the new withholding tables work best for you, and, if not, how to reconcile the problem.
Follow the link to get an early glance at the preliminary withholding tables: https://www.irs.gov/pub/irs-pdf/n1036.pdf
Written by Thomas Dyer