Now that the W-4 form is outdated (pay, taxes, rate)
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Will payroll services adjust the withholding for those with children for an estimate of child tax credit.? If not
Those families that were claiming 4 or 5 exemptions will be treated as married or single-no different then the newly wed down the hall.
If those first paychecks of the year show up short we will be able to hear the screams cross country.
December 26, 2017
The IRS is working to develop withholding guidance to implement the tax reform bill signed into law on December 22. We anticipate issuing the initial withholding guidance in January, and employers and payroll service providers will be encouraged to implement the changes in February. The IRS emphasizes this information will be designed to work with the existing Forms W-4 that employees have already filed, and no further action by taxpayers is needed at this time.
Use of the new 2018 withholding guidelines will allow taxpayers to begin seeing the changes in their paychecks as early as February. In the meantime, employers and payroll service providers should continue to use the existing 2017 withholding tables and systems.
That's interesting that they don't think they need new W-4's. How will they be able to distinguish allowances that are no longer allowed, such as dependent exemptions, local taxes and alimony?
That's interesting that they don't think they need new W-4's. How will they be able to distinguish allowances that are no longer allowed, such as dependent exemptions, local taxes and alimony?
Probably just assume the dependent exemptions are eligible for tax credit either in whole or as some percentage. I really have no idea how detailed they got with it before anyway. I always assumed it was sort of a one-size-fits-all estimate, no? So just refigure the estimate and replace exemption with child tax credit and sort it out when they file their taxes. It almost always under-estimates anyway. Most people get tax returns unless they get a significant portion of their income from other sources.
Probably just assume the dependent exemptions are eligible for tax credit either in whole or as some percentage. I really have no idea how detailed they got with it before anyway. I always assumed it was sort of a one-size-fits-all estimate, no? So just refigure the estimate and replace exemption with child tax credit and sort it out when they file their taxes. It almost always under-estimates anyway. Most people get tax returns unless they get a significant portion of their income from other sources.
The previous withholding tables were far from one size fits all. They were based on the number of claimed exemptions, married vs. single, the standard deduction, calculated taxable income computed for the pay period and the tax rate for that income. On average, it generally resulted in being slightly over withheld (not under). People whose itemized greater deductions were above the standard could claim a higher number of exemptions. People who had measurable income outside of employment could withhold at the single rate if married, eliminate exemptions and/or have an added amount per pay period withheld, or pay an estimated difference quarterly.
That will have to be adjusted because credits are different than exemptions and they phase out at higher income levels. Married vs. single is less of an issue but still important over a certain income. Since the rates are still progressive, withholding rates will have to be correspondingly different.
I've always claimed zero, so I don't know what to claim now, since they're changing the W-4's.
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