It’s a good time to check your withholding September 2018 Tax News

In last month’s Tax News, we talked about making 3rd quarter California estimated tax payments. While the amount due for the 3rd quarter is 0, if your clients are underpaid/under withheld, this would be a great time for them to make an estimated payment or revise their withholding. This will help them so they don’t end up with a large balance due and possibly an underpayment penalty when they file their 2018 returns.

The IRS also wants taxpayers and tax professionals to know that it’s Time for a Paycheck Checkup. This is especially important because of the recent changes to federal tax law. To assist taxpayers, the IRS created an online withholding calculator that can be used to determine whether changes in withholding should be made. The following is from the IRS’ website:

The IRS Withholding Calculator helps you identify your tax withholding to make sure you have the right amount of tax withheld from your paycheck at work. There are several reasons to check your withholding:

  • Checking your withholding can help protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time next year.
  • At the same time, with the average refund topping $2,800, you may prefer to have less tax withheld up front and receive more in your paychecks.

If you are an employee, the Withholding Calculator helps you determine whether you need to give your employer a new Form W-4, Employee's Withholding Allowance Certificate You can use your results from the Calculator to help fill out the form and adjust your income tax withholding.

While it’s always a good idea to periodically check your federal and California withholding, it may make more sense to do so this year, especially for taxpayers impacted by the recent changes to federal tax law.