Time for your paycheck checkup!

Earlier this year I wrote about checking your withholding and estimated payments in light of the changes to the tax laws. When I wrote that, many of you were in the middle of finishing up your tax returns, so I imagine it probably went by the wayside. Now, since we’re 2/3 of the way through the year, is a perfect time for a paycheck checkup! Plus, if you’re retired, it’s a good time for a review of your estimated taxes as well. Since you have 4+ months left in the year, you can make adjustments if needed.

The IRS recently issued a Media Advisory urging folks do to a paycheck checkup – and I’ve included their advice and links to tools below. They also highlight those taxpayers that are especially encouraged to do the paycheck checkup, those that have a better than average chance to need to make adjustments. You can also review the earlier articles from Financial Ducks In A Row on doing your own Mid-Year Withholding Checkup or Mid-Year Estimated Payments Checkup as well.

Below is the actual text from the IRS Media Advisory:

IRS urges taxpayers to check withholding now to avoid tax surprises later; Spotlights special tools during week of Aug. 13 to help people overlooking major changes

With the year more than halfway over, the Internal Revenue Service urges taxpayers who haven’t yet done a “Paycheck Checkup” to take a few minutes to see if they are having the right amount of tax withholding following major changes in the tax law.

A summertime check on tax withholding is critical for millions of taxpayers who haven’t reviewed their tax situation. Recent reports note that many taxpayers could see their refund amounts change when they file their 2018 taxes in early 2019.

To help raise awareness for these taxpayers, the IRS is conducting a second “Paycheck Checkup” effort beginning the week of Aug. 13. During this week, the IRS is spotlighting a variety of tools – including the online Withholding Calculator – to help taxpayers learn if they need to make changes soon to avoid an unwelcome surprise come tax time.

The IRS is also encouraging partner groups inside and outside the tax community to share this important information with their members and employees. The IRS will also be holding special sessions on withholding for tax professionals and industry partners Aug. 15-16 in English and Spanish.

The Tax Cuts and Jobs Act, passed in December 2017, made significant changes, which will affect 2018 tax returns that people file in 2019. These changes make checking withholding amounts even more important. These tax law changes include:

• Increased standard deduction
• Eliminated personal exemptions
• Increased Child Tax Credit
• Limited or discontinued certain deductions
• Changed the tax rates and brackets

Checking and adjusting withholding now can prevent an unexpected tax bill and penalties next year at tax time. It can also help taxpayers avoid a large refund if they’d prefer to have their money in their paychecks throughout the year. The IRS Withholding Calculator and Publication 505, Tax Withholding and Estimated Tax, can help.

Special Alert: Taxpayers who should check their withholding include those who:

• Are a two-income family.
• Have two or more jobs at the same time or only work part of the year.
• Claim credits like the Child Tax Credit.
• Have dependents age 17 or older.
• Itemized deductions in 2017.
• Have high income or a complex tax return.
• Had a large tax refund or tax bill for 2017.