With tax reform bringing major changes for the year ahead, the Internal Revenue Service last week urged retirees to make sure they are paying in enough tax during the year by using the Withholding Calculator, available on IRS.gov.
The Tax Cuts and Jobs Act, enacted in December 2017, changed the way tax is calculated for most taxpayers including retirees. Among other reforms, the new law changed the tax rates and brackets, increased the standard deduction, removed personal exemptions and limited or discontinued certain deductions.
As a result, many taxpayers may need to raise or lower the amount of tax they pay in during the year, the IRS said.
For retirees who receive a monthly pension or annuity check, this may mean changing the amount of federal income tax they have withheld. The easiest way to do that is to use the withholding calculator. This useful online tool can also be helpful to those who receive pension or annuity payments on a regular schedule, usually monthly or quarterly, the IRS said.
Go to irs.gov for more details.