Do a Paycheck Checkup to Ensure You’re Withholding the Right Amount of Federal Income Tax

Last December, the federal Tax Cuts and Jobs Act was signed into law. In general, the impact of this legislation was to reduce the amount of federal income tax withheld from your paycheck, thus increasing your net pay. The Internal Revenue Service (IRS) continues to ask employers to encourage staff to do a “paycheck checkup” to ensure they are having the correct amount of federal income tax withheld. The IRS notes some of the significant tax law changes were: 

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

The IRS suggests taxpayers should check their withholding if you: 

• Are a two-income family 
• Have two or more jobs at the same time or only worked 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 

The IRS has provided a Withholding Calculator to help taxpayers determine if they are having the correct amount of federal income tax withheld. 

If you need to make a change to your tax withholding, it can be made through the Employee Online tab of your Employee Dashboard. Once in Employee Online, click on “Tax Information” in the left-hand navigation section, click on “Edit” in the lower right-hand corner of the screen, make your changes and click “Save” in the lower right-hand corner of the screen. Your change will automatically update the payroll system and will be processed on the next available payroll. 

You can model the impact of a tax withholding change on your paycheck through Employee Online by clicking “What If” under “Pay Check” in the left-hand navigation section. Once there, click “Create Baseline” in the bottom center of the screen (it may take a few seconds to calculate). In the “What If” column, make your withholding changes and click “Submit.” You can see the estimated change in your net pay on the right-hand side of the screen.