We recently published an article detailing the release of new Forms W-4 and a withholding calculator that reflects changes from the Tax Cuts and Jobs Act. But did you know? PrimePay has a host of calculators for you to use at your disposal, including an updated Form W-4 calculator.

According to the IRS, the average tax refund is around $2,800. Business Insider even has a full breakdown of the average refund per state. While some people prefer to have less tax withheld up front, the IRS recommends utilizing the calculator to make any necessary adjustments. Why? Because having too little tax withheld could result in an unexpected tax bill or a potential penalty come tax time in 2019.

It’s important to be well informed on what to expect when inputting information into the calculator. We’ll outline a few things to keep in mind.

Here are a few tips to share with your employees (or keep for yourself).

  1. Use the most recent pay stub and federal income tax return. This will help estimate income and other items for 2018. Note: The new tax law made significant changes to itemized deductions.
  2. Fill out all the information that would apply to their specific situation.
  3. Estimating is OK when necessary, however, know that the results are only as accurate as the information entered.
  4. Check out this IRS page for detailed FAQs and further instructions.

What to do after gathering results from the withholding calculator.

It’s a good idea to print that final screen that has the summary of results. Have your employees keep it handy to determine if they’ll need to complete a new Form W-4.

The calculator will provide insight into what changes should be made to the Form W-4, which your employees can then submit to whomever handles your human resources functions.

Guidelines from the IRS.

The ‘paycheck checkup’ series from the IRS includes helpful information for anyone who has questions such as:

  • Do I need to use an updated withholding calculator?
    • While it’s not a requirement, the IRS recommends doing so to ensure you’re having the right amount withheld from your paycheck.
  • Why were changes made to the withholding tables?
    • New withholding tables were necessary to account for the changes brought on by the Tax Cuts and Jobs Act, such as tax rates and brackets, the increased standard deduction, and the repeal of personal exemptions.
  • When do I need to check my withholding?
    • The IRS suggests checking at the beginning of each year or when a personal circumstance has changed.  
  • Are more changes to be expected?
    • It’s likely that there will be more changes coming in 2019.

You can find the full FAQs and more information from the IRS here.

Click here to access our calculator.

Disclaimer: Please note that this is not all inclusive. Our guidance is designed only to give general information on the issues actually covered. It is not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion. Consult your own legal advisor regarding specific application of the information to your own plan.