On January 11, 2018, the IRS issued Notice 1036, which updates the income tax withholding tables for 2018, reflecting changes made by the Tax Cut and Jobs Act passed in December of 2017. The updated withholding tables should be used by employers as soon as possible, but no later than February 15, 2018. You should check with your software company to determine when they have planned to release this update in your current software package. Take note, that until you update your software, you will be using the old tables.
The IRS is also working on a revised Form W-4, but the new tax tables have been designed to work with the old version of the Form W-4 from 2017. Employees will not have to do anything at this time. Employees who wish to update their withholding in response to the new law or changes in their personal circumstances in 2018 can request to do so using the old form or once the new form is released.
The Form W-4 is being updated due to the new tax act increasing the standard deduction, eliminating personal exemptions, increasing the child tax credit and a small percentage decrease in most tax brackets. The new tables and revisions are also being designed to avoid over and under withholding of tax as much as possible. If you have questions or need further assistance, please contact your Ketel Thorstenson accountant