The Tax Cuts and Jobs Act (TCJA) of 2017 resulted in many changes to our tax system, especially for individual taxpayers.
Under prior tax law, employers determined the amount of taxes to withhold from your paycheck based on the number of personal exemptions you indicated on your W-4. Under the TCJA, personal exemptions have been suspended. Thus, your prior W-4 may no longer be an accurate representation of how much should be withheld from your paycheck.
The IRS and Treasury department have attempted to adjust the withholding tables for 2019 based on the new tax rates and standard deductions. However, for taxpayers with more complicated tax situations, large overpayments - or underpayments - may be seen in 2019.
The old W-4 does not take into account many changes the TCJA had on individual tax returns, including changes to itemized deductions, job-related expenses, and tax credits. Changes to the W-4 are coming in 2020 to hopefully alleviate many of these issues. Second drafts of the 2020 W-4
and Pub. 15-T
, withholding instructions for employers, have been released.
But what about your withholdings for 2019?
Now is the perfect time to consider a tax projection. Our associates would be happy to calculate a projection of your 2019 tax liability based on your current and expected earnings. We can help determine if you are in a safe tax position for 2019, and if any additional estimated payments should be made to avoid penalties and interest come April 15.
Please reach out to us if you are interested in a tax projection, or if you have any questions about your 2019 tax situation.