With the tax deadline having just passed, now is the perfect opportunity to start planning for next year. Last year’s return should be readily available, and you may even have many important items committed to memory. Additionally, four months into the year is the perfect time to begin making current year projections. Of course, this year is different. That’s because 2018 will be the first we file under the changes created by the Tax Cuts and Jobs Act (TJCA).
One thing you should do is reexamine your withholding. Back in February, the IRS released an updated withholding calculator that reflects changes under the new tax law. You can find the new withholding calculator here (https://apps.irs.gov/app/withholdingcalculator). The great thing about using the calculator is that you won’t have to deal with the new W-4 worksheets. The IRS specifically encourages taxpayers who fall into the following groups to double-check their withholding:Two-income families;
- Taxpayers with two or more jobs at the same time or who only work for part of the year;
- Taxpayers with children who claim credits such as the Child Tax Credit;
- Taxpayers who itemized deductions in 2017; and
- High income taxpayers and those with complex returns
To use the calculator, you’ll need your most recent pay stub (and your spouse’s, if applicable). Don’t bother starting if you don’t have this information; it’s practically impossible without it. You should also have a copy of your 2017 tax return. While not completely necessary, it will help you more accurately estimate potential deductions and credits. Finally, any other sources of income you expect to receive, along with anticipated deductions, should be factored in. Remember, underestimating your income can lead to a tax bill at the end of the year, so you want to be accurate. Read More