Filling out a new withholding form for your employer is beneficial. The form is called W4 and there is a new version out.

Employee’s Withholding Allowance Certificate – Form W4

A new version of Form W-4 is available to help taxpayers check their 2018 tax withholding following passage of the Tax Cuts and Jobs Act.

 

Purpose. Complete Form W-4 so that yourUntitled
employer can withhold the correct federal
income tax from your pay. Consider
completing a new Form W-4 each year and
when your personal or financial situation
changes.

 

If changes to withholding should be made, the Withholding Calculator gives employees the information they need to fill out a new Form W-4, Employee’s Withholding Allowance Certificate. Employees will submit the completed W-4 to their employer.

 

Generally, on line 5 you will enter 0 to withhold the maximum amount.  However, if you are looking to come out even at the end of the year on your tax liability you may be able to get away with claiming 1 or higher, even without and dependents.

 

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

 

weekly wages paid income tax withholding

 

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 IRS.gov, 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 IRS.gov. 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.

There are some major changes for individuals on the Schedule A (Itemized Deductions) per the Tax Cuts and Jobs Act

Many of the deductions that people have been taking over the last several years are going away for years’ 2018 and later.  These particular items can be found on the 1040 Schedule A.  See below.

 

Deduction for personal casualty and theft losses suspended (unless incurred in federally-declared disaster area)

Limitations to the deduction for state and local taxes

Limitations to the deduction for home mortgage interest in certain cases

Eliminating most miscellaneous itemized deductions such as:

  • Deductions for employee business expenses
  • Tax preparation fees
  • Investment expenses, including investment management fees
  • Employment related educational expenses
  • Job search expenses
  • Hobby losses
  • Safe deposit box fees
  • Investment expenses from pass-through entities

Eliminated the limitation on itemized deductions for certain high-income taxpayers.

Resources: IR-2017-210IR-2018-32IR-2018-122IR-2018-127

Stash invest has some advise on kids and budgeting. Here it is.

https://learn.stashinvest.com/back-to-school-budgeting

Teach your kids how to navigate the back-to-school shopping jungle with this budgeting activity.

3 min read

The summer is drawing to a close, and it’s almost time for your kids to head back to school.

To get ready, you’ll need to do some back-to-school shopping, for new sneakers, notebooks, pencils and all the other items that your kids will need for a new year of classes.

But do your children know how much it will cost to buy all of that gear? It’s important for kids to learn the value of money, and how much things cost, whether that’s for a new hobby, game, or all that back-to-school merchandise.

In this activity, your children will learn how to create a budget and a spending plan. This activity will help your child practice these skills when it comes to making purchases for school. This activity is for children between 3rd and 8th grades.

What will your kids learn? Most children participate in preparing to go back to school. New clothes, shoes, backpacks, school supplies, haircuts, and technology are often found on wish lists, but they can be budget breakers. Teaching children to classify “needs” versus “wants,” prioritize needed items, and spend within a set budget, are valuable life lessons. While working on this activity, children will practice and learn valuable lessons about budgeting and buying.

Teach your kids about back to school budgeting

Download the activity sheet

What You’ll Need

Getting Started

  • Set a dollar amount for your child’s back-to-school spending budget.
  • On the “Back-to-School Wishlist,” create a list of items your child wishes to buy.
  • Decide which of these items are needs, and which are things you want, but could do without. Circle your selection.
  • Have your child prioritize the list. Number the most important item on my list as 1.
  • The child will transfer the list to the “Back-to-School Shopping List.” Help your child research each item to determine its price, and where to buy it.
  • The child will find the total cost of the list. Does it if within his or her budget? If not, work together discussing priorities and possibly needing to save for an important item.

Talk to your kids!

Parents should check in with their children to make sure they understand what they’ve learned.

It is important that your child understand needs versus wants. When working on the list or reviewing after your child has completed it, discuss different opinions. Children need sneakers for school. Do children need the latest popular sneaker? There is a computer available to them at school, do they need their own?

  • What do you need to start the school year? Encourage your child to set a reasonable budget and stick to it.
  • Do they need to spend all of their money? What can they do with any extra? (encourage savings)
  • Have a discussion about the best time to buy certain items. Although stores have back-to-school sales on clothes during the summer, if you wait those same items are permanently discounted in early fall.
  • Assist your child in researching where they can get the best price. Don’t make purchases until a plan is in place.
  • How can you save for items that fall outside the budget? If your child wants something you deem extravagant, make a plan.
  • After completing the activity, encourage your child to continue the practice of keeping a list, identify needs vs. wants and prioritizing. Talk about continued planning for other items and events.

By Stash Team

IRS Tax Reform Tax Tip 2018-124: IRS tells taxpayers who got a big refund to do a “paycheck checkup”

Source: IRS Tax Reform Tax Tip 2018-124: IRS tells taxpayers who got a big refund to do a “paycheck checkup”

 

After filing tax returns, many people put taxes far out of their mind. However, taxpayers who received a large tax refund this year should think about taxes again…and the sooner the better. The IRS urges these taxpayers to visit the Withholding Calculator on IRS.gov and do a “paycheck checkup.” Doing so will help them make sure their employers are withholding the correct amount of taxes from their paychecks.

Most taxpayers receive refunds averaging around $2,800. Taxpayers who receive large refunds could receive more of their money throughout the rest of this year, rather than waiting until they file their tax return next year.

The Tax Cuts and Jobs Act was passed last year, and it included many tax law changes. Taxpayers who calculate their tax payments throughout the year in order to receive a refund at tax time should check to see how the new tax law affects them. A “paycheck checkup” can help taxpayers apply the new law changes to their situation.

Here are some of the changes that affect taxpayers who received a refund this year, but also many other people:

  • The law reduced tax rates and changed tax brackets.
  • The standard deduction nearly doubled. The new rules raise the standard deduction to $24,000 for joint filers and $12,000 for singles for 2018. Many taxpayers who previously itemized their deductions will find the standard deduction is now of bigger benefit.
  • The law removed personal exemptions.
  • The child tax credit is bigger and the phaseout amount is higher.
  • The law added a new tax credit for dependents who can’t be claimed for the child tax credit.
  • The law limited or discontinued certain deductions.

The calculator can help navigate each tax situation to make sure the amount withheld best fits the need of every taxpayer. It can help taxpayers decide if getting more money in each paycheck could make more financial sense than getting a refund at tax time next year. Adjusting withholding amounts now can also prevent having too little tax withheld, resulting in an unexpected tax bill next year.

For information about how to use the calculator and how to change withholding, taxpayers can check out the IRS Tax Reform Tax Tips on IRS.gov.

Taxpayers may also need to determine if they should make adjustments to their state or local withholding. They can contact their state’s department of revenue to learn more.

Reminder for extension filers: Oct. 15 is just around the corner

Source: Tax Tip 2018-110: Reminder for extension filers: Oct. 15 is just around the corner

Monday, October 15, 2018, is the extension deadline for most taxpayers who requested an extra six months to file their 2017 tax return.

For taxpayers who have not yet filed, here are a few tips to keep in mind about the extension deadline and taxes:

  • Try IRS Free File or e-file. Taxpayers can still e-file returns for free using IRS Free File. The program is available only on IRS.gov. Filing electronically is the easiest, safest and most accurate way to file taxes.
  • Use direct deposit. For taxpayers getting a refund, the fastest way to get it is to combine direct deposit and e-file.
  • Use IRS online payment options. Taxpayers who owe taxes should consider using IRS Direct Pay. It’s a simple, quick and free way to pay from a checking or savings account. There are other online payment options.
  • Don’t overlook tax benefits. Taxpayers should be sure to claim all entitled tax credits and deductions. These may include income and savings credits and education credits.
  • Keep a copy of the tax return. Taxpayers should keep copies of tax returns and all supporting documents for at least three years. This will help when adjusting withholding, making estimated tax payments and filing next year’s return.
  • File by October 15. File on time to avoid a potential late filing penalty.
  • More time for the military. Military members and those serving in a combat zone generally get more time to file. Military members typically have until at least 180 days after leaving a combat zone to both file returns and pay any tax due.

 

 

IRS Tax Tip 2018-101: What taxpayers can do when a letter arrives this summer

Source: IRS Tax Tip 2018-101: What taxpayers can do when a letter arrives this summer

 

What taxpayers can do when a letter arrives this summer

Some taxpayers will receive a letter from the IRS this summer. Taxpayers should not panic and remember that they have fundamental rights when interacting with the agency.   Forward copies of any letters to your tax preparer and they can often help you navigate your options and requirements.

These rights are in the Taxpayer Bill of Rights. Among other things, these rights dictate that letters from the IRS must include:

  • Details about what the taxpayer owes, such as tax, interest and penalties.
  • An explanation about why the taxpayer owes the taxes.
  • Specific reasons about why the IRS may have denied a refund claim.

Taxpayers who receive a letter from the IRS can do some simple things when it arrives. Taxpayers should remember to:

  • Read the entire letter carefully. Most letters deal with a specific issue and provide specific instructions on what to do.
  • Compare it with the tax return. If a letter indicates a changed or corrected tax return, taxpayer should review the information and compare it with their original return.
  • Respond. Taxpayers should:
    • Respond to a letter with which they do not agree.
    • Mail a letter explaining why they disagree.
    • Mail their response to the address listed at the bottom of the letter.
    • Include information and documents for the IRS to consider.
    • Allow at least 30 days for a response.
  • Reply timely if necessary. If a taxpayer agrees with the information, there’s no need to contact the IRS. However, when a specific response date is in the letter, there are two main reasons a taxpayer should respond by that date:
    • To minimize additional interest and penalty charges.
    • To preserve appeal rights if the taxpayer doesn’t agree.
  • Pay. Taxpayers should pay as much as they can, even if they can’t pay the full amount they owe. They can pay online or apply for an Online Payment Agreement or Offer in Compromise.
  • Contact the IRS if necessary. For most letters, there’s no need to call the IRS or make an appointment at a taxpayer assistance center. If a call seems necessary, the taxpayer can call the phone number in the upper right-hand corner of the letter. They should have a copy of the tax return and letter on hand when calling.
  • Keep the letter. A taxpayer should keep copies of any IRS letters or notices received with their tax records.