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The Top 14 Questions About the New IRS Withholding Tables

irs withholding tables

Following the recent tax law changes, it’s especially important for certain employees to use the Withholding Calculator on IRS.gov to check if they are having the right amount of withholding.

Q: What is a withholding table?

A: A withholding table shows the employer and payroll service how much tax to withhold from employee paychecks, given the information shown on Form W-4.

Q: Why should employees check their tax withholding?

A: There are changes in the tax law every year that could affect the amount of tax they owe.

Q: Will employees need to fill out a new Form W-4?

A: It depends. Every year the IRS revises the Form W-4 worksheets and the Withholding Calculator. Employees should use the Withholding Calculator to check if they need to adjust their withholding. If they need to fill out a new Form W-4, they should do so and give it to their employers.

Q: What is a Form W-4?

A: Form W-4 is an IRS form that employees give to their employers that provides information used to determine the amount of federal income tax to withhold from each employee’s paycheck. The Form W-4 relates to an employee’s federal tax withholding. State withholding is separate.

Q: Do all employees need to check their tax withholding?

A: No. Employees with simpler tax situations do not need to make any changes. Simple situations include singles and married couples with only one job, who have no dependents, and who do not claim itemized deductions or other adjustments to income or tax credits.

Q: Which employees check to see if they should change their withholding allowances?

A: If an employee falls into any of the following groups they should check to see if they are having the right amount of withholding.
– Belong to a two-income family.
– Work two or more jobs or only work for part of the year.
– Have children and claim credits such as the Child Tax Credit.
– Have older dependents, including children age 17 or older.
– Itemized deductions on their last tax return.
– Earn a high income and/or have more complex tax returns.
– Received a large tax refund or had large tax bills.

Q: Should employees that live and work in New Jersey change their withholding allowances?

A: In addition to the situations described above, New Jersey employees that have state and local tax deductions greater than $10,000 are advised review their withholding allowances.

Q: How do Employees change the amount of tax withheld from their paychecks?

A: Employees who need to change the amount of tax withheld from their paychecks need to complete Form W-4 and give it to their employer. The IRS encourages employees to use the Withholding Calculator to check their personal situation and help see if they are having the right amount of tax withheld.

Q: What is the Withholding Calculator?

A: The Withholding Calculator is a tool on IRS.gov designed to help employees determine the right amount of tax to have their employer withhold from their paychecks. It is a more accurate alternative to the worksheets that accompany the Form W-4s.

Q: Where can I find the IRS Withholding Calculator?

A: IRS.gov then search withholding calculator

Q: Does the IRS prefer that people get refunds?

A: Getting a refund is a personal choice for taxpayers.

Q: How does someone determine how many allowances they should claim on their Form W-4?

A: The Withholding Calculator will help employees determine that. Remember, the fewer allowances someone enters on the Form W-4, the more tax will be withheld from their paycheck. So, entering “0” or “1” on Form W-4 will mean more tax is withheld from their paycheck. Entering a larger number of allowances means less tax withholding—which means a smaller tax refund or potentially a tax bill when the employee files their tax return. Employees with more complicated tax situations should review their situation carefully. The Withholding Calculator can help.

Q: Can a payroll office or human resources department help someone understand these tax law changes or use the Withholding Calculator?

A: It is an employee’s responsibility to check their withholding and determine if it’s accurate for their personal situation. Payroll offices and human resource departments are responsible only for processing the Form W-4. The people working in these offices do not know the rest of someone’s personal financial situation, and they are not responsible for giving you tax advice.

Q: Does it make any difference when an employee checks on their withholding?

A: Sooner is better. Withholding takes place throughout the year. If an employee needs to adjust their withholding, doing so as quickly as possible means there’s more time for tax withholding to take place evenly during the rest of the year.

Our team of professionals is available to help small businesses in NJ figure out withholding tables and other payroll-related issues. We help businesses remain in compliance with the latest updates.

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Disclaimer
This FAQ is based on material sourced from irs.gov and may not be relied upon as legal authority. This means that the information cannot be used to support a legal argument in a court case.