Impact of the W-4 Form based on Federal Income Tax Calculations

OVERVIEW

The Tax Cut and Jobs Act of 2017 (TCJA) created changes in the tax code that impacted personal income taxes. The Act also included the creation of a new Form W-4, in line with updates to the tax code. 

The act does not require you to fill out a new W-4 form, but many financial advisers recommend doing so to ensure accurate federal withholding calculation.

CONSIDERATIONS

The IRS recommends taxpayers consider filing a new W-4 form if any of the following apply:

• You are part of a two-income family, or are someone with multiple jobs

• You work a seasonal job or only work part of the year

• You claim the child tax credit

• You have dependents age 17 or older

• You've itemized your deductions in previous tax years

• Your income is high, or you have a complex tax return

• You had a large tax refund last year

• You had a tax bill last year

ADDITIONAL RESOURCES

• The IRS has developed a fifteen-minute online wizard called the Paycheck Checkup, which will ask you a series of questions that can help you determine the best way to fill out the new W-4 form.

• Refer to IRS Publication 15-T to learn how federal income tax is calculated.

• Use the IRS Tax Withholding Estimator to determine your federal income tax per pay period based on your W-4 form.