2018 income tax withholding tables implementation

Cornelia Mascio
Gennaio 20, 2018

However given the new tax withholding rates, it may be necessary for an employee to change the number of withholding allowances selected on their existing W-4.

"The updated tables are now here and for Paychex Flex clients submitting payroll today, those payrolls will be processed using the new withholdings", says Martin Mucci, president and CEO of Paychex. They should continue to use the 2017 withholding tables until implementing the 2018 withholding tables. This will minimize burden on taxpayers and employers.

Decreasing supplemental withholding to 22% could result in employees having significant income tax obligations due at the time they file their tax returns - particularly high earning employees. "In the weeks ahead, the IRS will be providing more information to help people understand and review these changes".

For people with simpler tax situations, the new tables are created to produce the correct amount of tax withholding.

Prior to the IRS's issuance of Notice 1036, there was ambiguity as to the withholding rate that would apply to 2018 supplemental wages of $1 million and under after the enactment of the Tax Cuts and Jobs Act (the TCJA). The revisions are also aimed at avoiding over- and under-withholding of tax as much as possible. Taxpayers are encouraged to use the calculator to adjust their withholding once it is released. 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 scam works by thieves identifying the person or persons who have access to W-2 forms in a business. A BEC is an email sent to a payroll, financial or human resources employee by a cybercriminal who is able to "spoof" or impersonate an executive's email address within a company or organization.

However, the new system, updated by the IRS and the U.S. Treasury Department in under one month, could leave more room for miscalculation where withholding amounts are concerned. The IRS says the Form W-2 scam has emergeed as one of the most risky phishing emails in the tax community.

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