Monday, January 22, 2018

Updated 2018 Withholding Tables Now Available; Taxpayers Could See Paycheck Changes by February

IR-2018-05, Jan. 11, 2018

WASHINGTON — The Internal Revenue Service today released Notice 1036, which updates the income-tax withholding tables for 2018 reflecting changes made by the tax reform legislation enacted last month. This is the first in a series of steps that IRS will take to help improve the accuracy of withholding following major changes made by the new tax law.

The updated withholding information, posted today on, shows the new rates for employers to use during 2018. Employers should begin using the 2018 withholding tables as soon as possible, but not later than Feb. 15, 2018. They should continue to use the 2017 withholding tables until implementing the 2018 withholding tables.

Many employees will begin to see increases in their paychecks to reflect the new law in February. The time it will take for employees to see the changes in their paychecks will vary depending on how quickly the new tables are implemented by their employers and how often they are paid — generally weekly, biweekly or monthly.

The new withholding tables are designed to work with the Forms W-4 that workers have already filed with their employers to claim withholding allowances. This will minimize burden on taxpayers and employers. Employees do not have to do anything at this time.

“The IRS appreciates the help from the payroll community working with us on these important changes,” said Acting IRS Commissioner David Kautter. “Payroll withholding can be complicated, and the needs of taxpayers vary based on their personal financial situation. In the weeks ahead, the IRS will be providing more information to help people understand and review these changes."

The new law makes a number of changes for 2018 that affect individual taxpayers. The new tables reflect the increase in the standard deduction, repeal of personal exemptions and changes in tax rates and brackets.

For people with simpler tax situations, the new tables are designed to produce the correct amount of tax withholding. The revisions are also aimed at avoiding over- and under-withholding of tax as much as possible.
To help people determine their withholding, the IRS is revising the withholding tax calculator on The IRS anticipates this calculator should be available by the end of February. Taxpayers are encouraged to use the calculator to adjust their withholding once it is released.

The IRS is also working on revising the Form W-4. Form W-4 and the revised calculator will reflect additional changes in the new law, such as changes in available itemized deductions, increases in the child tax credit, the new dependent credit and repeal of dependent exemptions.

The calculator and new Form W-4 can be used by employees who wish to update their withholding in response to the new law or changes in their personal circumstances in 2018, and by workers starting a new job. Until a new Form W-4 is issued, employees and employers should continue to use the 2017 Form W-4.

In addition, the IRS will help educate taxpayers about the new withholding guidelines and the calculator. The effort will be designed to help workers ensure that they are not having too much or too little withholding taken out of their pay.

For 2019, the IRS anticipates making further changes involving withholding. The IRS will work with the business and payroll community to encourage workers to file new Forms W-4 next year and share information on changes in the new tax law that impact withholding.

More information is available in the Withholding Tables Frequently Asked Questions.

Friday, December 29, 2017

10 Tax Deductions That Are Going Away In 2018

The new tax reform bill is now law, and taxpayers can expect a lot of changes to take place in 2018. Reduced tax rates, higher standard deductions, and higher child tax credits for families are just a few of the perks that individual taxpayers will see next year.

To pay for these tax breaks, however, lawmakers took away many deductions that millions of taxpayers had used every year to reduce their tax bills. The ten deductions we'll discuss are just some of the popular provisions that will disappear, and taxpayers will have to look closely at their own personal situations to see whether other, less common deductions are also going away.

1. Personal exemptions
The biggest move that the tax reform bill made was to take away personal exemptions, which generally allowed taxpayers to reduce their taxable income by $4,050 per person. Many policymakers argued that the personal exemption was essentially merged into the standard deduction, but the rise in the standard deduction under tax reform wasn't large enough to compensate for the loss of personal exemptions for some taxpayers.

2. Home equity loan interest
Mortgage interest on purchase loans is still deductible under tax reform up to $750,000, but the deduction for interest on home equity loans becomes nondeductible once 2018 begins. Unlike with purchase loans, there's no grandfathering provision for existing home equity loans, so for those for whom the deduction is important, looking at potentially repaying those loans sooner than expected might be worth considering.

3. Moving expenses
Taxpayers won't be allowed to deduct moving expenses, as they can for 2017. To be deductible, a move had to be motivated by a job change, with the new job being at least 50 miles further from where you used to live than your old job was. The best thing about the moving expense deduction was that you didn't have to itemize deductions to get it, but it will be gone for 2018 and beyond.

4. Exes and Taxes
In any divorce commenced after Dec. 31, 2018, the spouse paying alimony can't deduct it, and the spouse receiving the money no longer has to pay taxes on it. Now, it's the opposite. This will not impact divorce agreements that are already in place. 

5. Casualty and theft losses except in disaster areas
Casualty losses under old law were eligible as itemized deductions to the extent that they exceeded $100 plus 10% of your adjusted gross income. Events included not only natural disasters but also fires, robberies, and other qualifying occurrences. The new law now preserves the deduction only for disasters for which a presidential disaster area declaration was made.

6. Job expenses
Money you spent on certain job costs, such as license and regulatory fees, required medical tests, and unreimbursed continuing education, was available as an itemized deduction to the extent that it and other miscellaneous deductions exceeded 2% of your adjusted gross income. Now, you won't be able to deduct these costs anymore, making it even more worth your while to try to get your employer to pay them on your behalf.

7. Subsidized parking and transit reimbursement
Employees were eligible under old tax law to get up to $255 per month from their employers to subsidize parking costs or transit passes. Workers didn't have to include those perks in income, and companies could deduct it. Now, the corporate deduction for that cost will go away, and that could lead some businesses to stop offering those programs to workers.

8. Tax preparation fees
Just like job expenses, costs to have your taxes done were also available as miscellaneous itemized deductions. That won't be the case anymore, and any costs for tax preparation will be nondeductible in 2018.

9. Other miscellaneous deductions
A host of other miscellaneous deductions subject to the 2% AGI limitation will all be gone in 2018. These include investment fees and expenses, convenience fees for using a credit or debit card to pay your taxes, and trustee fees for an IRA if paid separately.

10. Donations to colleges in exchange for athletic event seats
One controversial provision allowed donors to give money to colleges and deduct the full amount, even if they got back tickets or seating rights to athletic events. That perk will go away, and donors will have to reduce their deductions by the value of those tickets.

One last chance
If you have any of these deductions, do what you can to get them into the 2017 tax year. That way, you can claim them one last time before they're no longer available in 2018.

Thursday, October 26, 2017

Five Years

We want to thank our families, friends and all our amazing clients for your support and loyalty as we celebrate our 5th anniversary! We couldn't have done it without you!