Taxpayers who Support Dependents Should Check Their Withholding Now

The following article was published by the IRS.

read-515531_1280Taxpayers who support older dependents should head over to the Withholding Calculator on IRS.gov and do a “paycheck checkup” ASAP. They can use the calculator to make sure they are having their employers are withhold the right amount of tax from their paychecks this year.

The Tax Cuts and Jobs Act, which was passed last year, added a new tax credit: the credit for other dependents. This new credit is just one law change that can affect a family’s tax situation this year. So, checking and adjusting withholding now is important to do because it can prevent an unexpected tax bill and even penalties next year at tax time.

The Credit for Other Dependents is available for dependents for whom taxpayers cannot claim the newly expanded Child Tax Credit. These dependents may include dependent children who are age 17 or older at the end of 2018, or parents or other qualifying relatives supported by the taxpayer. Families with qualifying children under the age of 17 should first review their eligibility for the expanded Child Tax Credit, which is larger.

The new credit:

  • Offers up to $500 per eligible dependent
  • Begins to phase out at $400,000 for joint filers, and $200,000 for other taxpayers.

If a taxpayer needs to adjust their paycheck withholding amount, doing so sooner rather than later means there’s more time for withholding to take place evenly throughout the year. Waiting until later means there are fewer pay periods to make the tax changes.

The Withholding Calculator is the most accurate way for most taxpayers to help determine their correct withholding amount. The tool allows taxpayers to enter their expected 2018 income, deductions, adjustments and credits – including the new credit for other dependents.

For information about how to use the calculator and how to change withholding, taxpayer 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.

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About cozbycpa

Heather L. Cozby is a CPA on the South Shore and Cape Cod. The managing partner of Cozby & Company, LLC, Heather has the resources and experience necessary to provide quality professional services on a timely basis and at a reasonable cost. She specializes in tax planning & preparation; audit, review & compilation services; management advisory services; bookkeeping; and accounting. Her unique niche is in working with homeowners’ associations and condominium trusts, advising with rental real estate, and providing outsourced financial consulting for mid-sized companies. She is more entrepreneurial than most accountants, and offers the best of both worlds - providing the services of a larger firm while retaining the ability to connect with her clients on a personal level.
This entry was posted in Child Tax Credit, IRS, Personal Taxes, Planning Strategies, Tax Credits, Tax Law Changes, Tax Tips, Taxes, Uncategorized and tagged , , , , , , , , . Bookmark the permalink.

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