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If You Are in a Two-Income Family or Work Multiple Jobs, You Should Check Your Withholding Amount

The passage of the Tax Cuts and Jobs Act, which will affect 2018 tax returns that you file in 2019, makes checking your withholding amounts even more important. These tax law changes include:

  • Increased standard deduction
  • Eliminated personal exemptions
  • Higher thresholds for individual alternative minimum tax (AMT)
  • Increased Child Tax Credit
  • Limited or discontinued certain deductions
  • Changed the tax rates and brackets

Those with more complex tax profiles, such as two income families or multiple jobs, may be more vulnerable to being under-withheld or over-withheld following these major law changes. We encourage a “paycheck checkup” as early as possible to help you check if you are having the correct amount withheld for your personal financial situations.

If you need to adjust your paycheck withholding amount, doing so earlier gives you more time for your withholding to take place evenly throughout the year. Waiting means there are fewer pay periods to make the tax changes, which could have a bigger effect on each paycheck.

The tax law changes generally don’t affect 2017 returns that you are filing in 2018. The changes affect 2018 returns, which you will file in 2019.

Adjusting Withholding

If you have a complicated tax situation you should consult a Certified Public Accountant to help you determine how much you should be withholding. To adjust your withholding, you should submit a completed Form W-4 to your employer as soon as possible.  If you have a change in personal circumstances that reduce the number of withholding allowances, you must submit a new Form W-4 with the corrected withholding allowances to your employer within 10 days of the change.

For more information, always consult a Certified Public Accountant.  Submitted by: Ying Wang, Senior Manager, Tax Services, Thomas Howell Ferguson P.A. CPAs, (850) 668-8100, ywang@thf-cpa.com.

 

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