In light of the new tax bill president Trump signed last month, the IRS has released Notice 1036, which officially announces the updates to the income-tax withholding tables for 2018. These updates are the first of a series of steps the IRS will be taking to align with the new tax laws.
The notice advises employers to implement the 2018 withholding tables as soon as possible, but not later than February 15, 2018. Employers can continue to use the 2017 withholding tables until the new ones are implemented.
As more and more employers begin implementing these time consuming and tedious changes, employees will concurrently begin seeing those changes on their paychecks. Acting IRS commissioner David Kauter issued the following statement on the matter:
“The IRS appreciates the help from the payroll community working with us on these important changes. 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.”
What the New IRS Tax Tables Mean for PAYDAY Clients
The process to implement the updated tax tables before the February 15th deadline on PAYDAY’s payroll software is well underway. These updates will be rolled out automatically for our clients and PAYDAY will be emailing notifications immediately after the changes are implemented.
Revised W-4 Forms
The new withholding tables are designed to work with the existing Form W-4 that workers have already filed with their employers to claim withholding allowances, and thus, minimizes the burden on taxpayers and employers. Employees do not have to do anything at this time.
The IRS, however, is currently working on a revised Form W-4 to allow employees who wish to update their withholding in response to the new tax law changes. Once available, employers will be able to use this updated form with existing as well as new employees. Until then, however, employers can continue using the 2017 Form W-4.
Stay tuned for more developments as the IRS continues to release information. Visit the official IRS Withholding Tables Frequently Asked Questions page for more information.