By Kevin McCormally, Chief Content Officer , and Sandra Block, Senior Editor and Joy Taylor, Editor | January 4, 2018
The new year starts with a new tax law affecting every taxpayer in the land. Now that a jubilant President Trump has signed the massive tax overhaul into law, it’s time for the number crunching to move from Capitol Hill to your kitchen table. Do the pros and cons found in the 500-plus pages of legislative language add up to good news or bad news for your family’s bottom line?
Here’s a look at key provisions of the new law that could affect everything from your family to your investments to your retirement planning. Most of the changes go into effect right away in 2018, but will NOT affect your 2017 tax return due in April. In almost every case, that return is covered by the old rules. Also, note that many of the changes affecting individuals are scheduled to expire after 2025. Unless a future Congress acts to extend them, most of these rules would revert to those in effect in 2017.
By Sally P. Schreiber, J.D.
January 11, 2018
The IRS on Thursday issued new income tax withholding tables that reflect new tax rates and other changes for individuals implemented by P.L. 115-97, known as the Tax Cuts and Jobs Act, enacted Dec. 22 (Notice 1036). Employers should use the updated withholding rules for 2018, putting them into effect as soon as possible but no later than Feb. 15, the IRS said. Until then, employers should continue to use the 2017 withholding tables.Read More
The IRS noted that many employees should begin to see their take-home pay increase in February depending on how quickly their employers implement the new tables and whether they are paid weekly, biweekly, or monthly. The new withholding tables are designed to work with Forms W-4, Employee’s Withholding Allowance Certificate, that employees already have on file, so employees do not have to fill out new ones at this time. The IRS plans on issuing a new Form W-4 in the near future. It is also working on revising the withholding tax calculator available on its website, which it expects will be finished by the end of February.
According to the IRS, the new tables in Notice 1036 reflect the increase in the standard deduction, the repeal of personal exemptions, and new tax rates and brackets. The new tables are designed to produce the correct amount of tax withholding and are also intended to avoid over- and under-withholding of tax.
The IRS also posted a “frequently asked questions” page on its website to explain the new withholding tables to taxpayers.
The IRS says it will make additional changes to its withholding tables in 2019 and work with employers and the payroll industry on designing these changes.