The IRS released Notice 1036 (see link below), which updates the income-tax withholding tables for 2018 reflecting changes in tax rates and tax brackets, increased standard deduction and repeal of personal exemptions that were included in the new tax reform law Tax Cuts and Jobs Act (TCJA) signed in December.
Employers should begin using the 2018 withholding tables as soon as possible, but not later than Feb. 15, 2018. They should continue to use the 2017 withholding tables until implementing the 2018 withholding tables. The withholding guidance issued today is for employers to make changes to their payroll systems and is designed to work with existing W-4s that employees have on file.
Employees no need to fill out a new W-4 form right now. The new withholding tables are designed to minimize taxpayer burden as much as possible and will work with the Forms W-4 that workers have already filed with their employers to claim withholding allowances. The IRS is working on revising the Form W-4 to more fully reflect the new law and provide taxpayers information to determine whether they need to adjust their withholding.
Employees should begin to see withholding changes in their checks in February. The exact timing depends on when their employer can make the change and how often they are paid. It typically takes payroll providers and employers about a month to update withholding changes on their systems.
Employees have more complicated tax situations and face the possibility of being under-withheld. For example, people who itemize their deductions, couples with multiple jobs or individuals with more than one job a year will be encouraged to review their tax situations. The IRS will be encouraging people – particularly those with more than one income in their household—to check their withholding. The IRS
The IRS is updating the 2018 Form W-4 and the IRS.gov withholding calculator to help with this process and will be releasing a new calculator and Form W-4 soon (February), to help employees ensure withholding is accurate.
The IRS encourages all taxpayers to check their withholding when the new information is available in February. The IRS will help educate taxpayers about the new withholding guidelines and the calculator. The effort will be designed to help workers ensure that they are not having too much or too little tax taken out of their pay.
In 2019, the IRS anticipates making further changes involving withholding. The IRS will work with the business and payroll community to encourage workers to file new Forms W-4 next year and share information on changes in the new tax law that impact withholding.
Click link for the Updated 2018 Withholding Table Notice 1036: https://www.irs.gov/pub/irs-pdf/n1036.pdf