Q: For 2018, when should I check the Withholding Calculator?

A: As soon as possible. Withholding takes place throughout the year. The earlier you check, the more time there is for withholding to take place evenly during the rest of the year. However, it is a good idea to check the Withholding Calculator when you have a copy of your 2017 tax return or your 2016 return available; having this will make using the Withholding Calculator easier.

Q: Why should I check on my withholding? 

A: The IRS always recommends employees check their withholding each year to make sure they’re having the right amount of tax withheld from their paychecks. This year, it’s more important than ever to check following major changes from the new Tax Cuts and Jobs Act. Among other things, the new law increased the standard deduction, removed personal exemptions, increased the child tax credit, limited or discontinued certain deductions and changed the tax rates and brackets. These changes mean it’s an especially good idea to do a “paycheck checkup” to review your tax withholding. Also, if you experience a change in your status that affects the number of your withholding allowances – such as a divorce – then you should check withholding so that you can give your employer a new Form W-4.

Q: Are some employees more likely to need to change their withholding in 2018?

A: Yes. For people with simpler tax situations, the 2018 withholding tables were designed to produce the correct amount of tax withholding—avoiding under- and over-withholding of tax. This means that people with simple situations do not need to make any changes, assuming their current Form W-4 on file with their employer was filled out following the form instructions. Simple situations include singles and married couples with only one job, who have no dependents, and who do not claim itemized deductions, adjustments to income or tax credits.

But many people have more complicated financial situations, and tax withholding from their wages might need to be revised.  With the new tax law changes, it’s especially important for these people to use the Withholding Calculator on IRS.gov to check if they have the right amount of withholding.

Among the groups with more complicated financial situations who should check their withholding are:

Families with more than one earner.
People with two or more jobs at the same time 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 2017.
People with high incomes and more complex tax returns.

Taxpayers with more complex situations might need to use Publication 505, Tax Withholding and Estimated Tax, expected to be available on IRS.gov in early spring, instead of the Withholding Calculator.  For example, this includes those who owe self-employment tax, the alternative minimum tax, or tax on unearned income from dependents, and people with capital gains or dividends.

For questions about your taxes and the new tax act contact one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,

Grayling 989.348.4055,  Livonia 734-462-6161,

Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600