The Internal Revenue Service has released a new online withholding calculator to help people determine their federal tax liabilities under the Tax Cuts and Jobs Act.
The withholding calculator projects how much filers may owe for the tax returns that are due in 2019. Along with the updated tax calculator, the IRS issued a revised W-4 form for those who may want to change their withholding allowances at work.
Employers began adjusting employee paychecks last month after the IRS issued withholding tables that reflect the lower federal tax rates, new tax brackets, increases in standard deductions and the repeal of personal exemptions. Most taxpayers are seeing bigger paychecks. But because key changes to the tax code have eliminated or capped several prized tax deductions, some taxpayers may end the year with a federal tax bill that is higher than what they had planned for.
“Withholding issues can be complicated, and the calculator is designed to help employees make changes based on their personal financial situation,” says acting IRS Commissioner David Kautter. “Taking a few minutes can help taxpayers ensure they don’t have too little — or too much — withheld from their paycheck.”