The Internal Revenue Service encourages taxpayers who typically itemized their deductions on Schedule A of the Form 1040 to use the Withholding Calculator this year to perform a “paycheck checkup.”
People who have itemized before may be affected by changes from the Tax Cuts and Jobs Act. Taxpayers who itemize should use the IRS Withholding Calculator at irs.gov to make sure their employers are withholding the appropriate amount of tax from their paychecks for their financial situation, the IRS said.
The law changes are effective in 2018 and affect the tax returns taxpayers will file in 2019. The new law makes a number of major changes, including:
■ Limiting the deductions for state and local taxes
■ Limiting the deduction for home mortgage interest in certain cases
■ Excluding deductions for employee business expenses, tax preparation fees and investment expenses, including investment management fees, safe deposit box fees and investment expenses from pass-through entities
The Tax Cuts and Jobs Act nearly doubled standard deductions and changed several itemized deductions.
Having too little tax withheld could result in an unexpected tax bill or penalty at tax time in 2019. Adjusting withholding after a “paycheck checkup” can also prevent employees from having too much tax withheld. With the average refund topping $2,800, some taxpayers might prefer to have less tax withheld up front and receive more in their paychecks.