By now, your employees should be noticing a change in their paychecks as a result of the 2018 Tax Cuts and Jobs Act. While more money in one’s pocket is always a good thing, there are some things that employees need to be made aware of, so that they are adequately prepared for tax season next year.
“Don’t be caught owing money to the government, plan now with a tax accountant and remember your employer is not responsible to pay your tax bill, they are only responsible to withhold the minimum amount from your check. You determine if you want to contribute extra so your tax filing turns into a refund!” says Sharon Tsao, CMO, Contemporary Staffing Solutions.
2018 Tax Withholding Changes
The new tax tables reflect the increase in the standard deduction, the repeal of personal exemptions and changes to tax rates and income brackets. These new tables are designed to ensure that employees are withholding the proper amount, avoiding under-withholding and over-withholding whenever possible.
The new tables are supposed to correlate with current W-4 form, the Employee Withholding Allowance Certificate, that employers have on file for each employee. According to the IRS, until a new W-4 form is issued by the agency, employees and employers should continue to use the 2017 form.
When the new form is issued, it will reflect the tax law changes regarding itemized deductions, increases in the child tax credit, the dependent credit and repeal of dependent exemptions. The new W-4 is expected to be released at the end of February. Because the form has been delayed, the IRS is suspending requirements that employees must provide a revised W-4 within 10 days of any change to their tax status.
2018 Income Tax Rates and Brackets
Tax rates and brackets have changed in the following ways:
|2018 Tax Rate||Single||Married Filing Jointly|
|10%||$0 to $9,525||$0 to $19,050|
|12%||$9,525 to $38,700||$19,050 to $77,400|
|22%||$38,700 to $82,500||$77,400 to $165,000|
|24%||$82,500 to $157,500||$165,000 to $315,000|
|32%||$157,500 to $200,000||$315,000 to $400,000|
|35%||$200,000 to $500,000||$400,000 to $600,000|
|37%||Over $500,000||Over $600,000|
|2017 Tax Rate||Single||Married Filing Jointly|
|10%||$0 to $9,325||$0 to $18,650|
|15%||$9,325 to $37,950||$18,650 to $75,900|
|25%||$37,950 to $91,900||$75,900 to $153,100|
|28%||$91,900 to $191,650||$153,100 to $233,350|
|33%||$191,650 to $416,700||$233,350 to $416,700|
|35%||$416,700 to $418,400||$416,700 to $470,700|
|39.6%||Over $418,40||Over $470,700|
How To Help Employees
Now is a great time to encourage employees to talk to their tax professional about the best way to take advantage of their tax credits. For some, this may mean making changes to their W-4. Others may want to increase 401(k) contributions. Others may wish to do nothing. However, a tax professional can ensure employees are taking the correct steps – HR and accounting should never be responsible for offering tax advice to employees.
“Invest in your future and take full advantage of the extra cash and work on saving for your future. Move through 2018 with a solid plan that prepares you for a surprise vacation or a surprise tax bill. You will be thankful for the cushion,” Says Angel Knighten, Accounting Supervisor, Contemporary Staffing Solutions.
It is worthwhile to encourage every employee to seek out advice on how to benefit based on their unique circumstances. If you are looking for accounting and finance professionals with the skills and experience to help your business navigate the ever-changing regulatory environment, Contemporary Staffing Solutions can help. To learn more about the ways our accounting and finance recruiters can move you towards your goals, contact CSS today.
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Contemporary Staffing connects job seekers to hiring managers nationally in the following professions: Accounting & Finance, Call Center & Office, Human Resources, IT, Salesforce, and Sales & Marketing.