On January 11, 2018, the Internal Revenue Service (IRS) released Notice 1036, which updates the income-tax withholding tables for 2018. The new table reflects the changes in the Tax Jobs and Cuts Act of 2017 that was enacted by legislation last month.
While many systems may be delaying this update, PeopleGuru is making these updates available for payrolls processed as early as Saturday, January 13, 2018.
It’s not unusual for such changes to spark confusion for both employers and employees. Here are 5 common questions regarding the new tax withholding tables:
What is a withholding table?
A withholding table outlines how much tax payroll service providers and employers need to withhold from an employee’s paycheck based off of an employee’s wages, marital status, and the number of withholding allowances they claim. Here’s what the new tables look like:
Why are these changes being made?
The new withholding tables are a necessity to reflect the changes in tax rates and tax brackets.
How soon will employees see the changes in their paychecks?
This is dependent on how long it takes payroll providers and employers to update the withholding changes into their systems. Most employees across the United States should expect to see withholding changes in their checks by February.
Although many employees won’t see changes until February, PeopleGuru HCM clients may see these changes as early as after the Martin Luther King holiday on January 15th or in the subsequent payroll.
What will employees need to do to get the new withholding rates?
Employees do not need to do anything to receive the new withholding rates. All payroll changes will be made by employers or payroll providers. The IRS will release a new calculator as a tool for employees to use to ensure their withholding is accurate. Be on the lookout for this new calculator toward the end of February.
Do I need to fill out a new W-4 form right now?
No, filing a new W-4 is optional. Your current filing status and number of exemptions still apply. If you would like to make changes to adjust additional withholding or your number of exemptions, you can complete a new W-4 using the existing 2017 form. Expect the IRS to release a revised Form W-4 in the near future.
Updating the income-tax withholding tables for 2018 is the first step of many the IRS plans to take in order to help improve the accuracy of withholding and comply with the new law.
This blog was written by Ally Edwards, Marketing Guru at PeopleGuru. This post may not be copied or published without PeopleGuru's express written permission.