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Friday, March 16, 2018

The IRS Has Released New W-4 Forms and Withholding Calculator

HR professional reviewing new W-4 Forms and Withholding Calculator

Following the passage of President Trump’s Tax Cuts and Jobs Act, the IRS has finally released the much anticipated new W-4 Forms and withholding calculator. However, please note that the new withholding change will not affect any 2017 tax returns. Here is what you will need to know about the IRS updates and policy changes.


The IRS Has Released New W-4 Forms and Withholding Calculator


This is excellent information to share with your staff but is also a great reminder for you as HR specialists. 

New IRS 2018 Wage and Tax Guide



Minimum Wage

Minimum Wage
$7.25
Minimum Cash Wage (Tipped Employee)
$2.13
Maximum Tip Credit
$5.12
Youth Minimum Wage
$4.25

FICA (Medicare)

Maximum Taxable Earnings
No Limit
Employee/ Employer Tax Rate  (Unchanged from 2017)
1.45%
Additional Medicare Tax Withholdings on Wages >$200,000 (No Employer Match)
0.9%


FICA (Social Security Tax)

Maximum Taxable Earnings
$128,400
Employee/Employer Tax Rate
2.3%


FUTA (Employer-Paid)

Maximum Taxable Earnings
$7,000
Percent of Taxable Wages
6.0%
Maximum Credit
5.4%
Normal Net Tax
0.6%

Supplemental Wage/ Bonus Rates

Flat Rate Withholding Method
25%
Pay Over $1 Million
39.6%

Health Savings Accounts

Self-Only Contribution Limit
$3,450
Family Contribution Limit
$6,900
Catch-Up Contribution Limit
$1,000

Retirement Plans

Contribution Limit
$18,500
Catch-up Contribution Limit
$6,000


State Payroll Tax

South Carolina Tax Guide

State Income Tax

Wage Withholding
Tables
Supplemental Wage/ Bonus Rate
7.0%

Unemployment Insurance

Maximum 2018 Taxable Earnings
$14,000
Employee Deduction
None
Employer 2018 Tax Rate
0.06 - 5.46%
Standard 2018 New Employer Rate
1.09%
Voluntary Contribution Permitted
No

Disability Insurance

Employee Deduction
None


What is Form W-4?

All of your employees are required to complete Form W-4 as part of their onboarding and new hire process. IRS Form W-4 is used to determine the correct amount of federal income tax that must be withheld from their pay.

It is a good idea to have your employees complete a new form each year, especially when their financial or personal situations change. It is also important that all of the information is correct because if the right amount is not withheld the employee may owe the IRS back taxes.


What The New Form W-4 Means For Employees?

HR professional reviewing changes to W-4 forms and withholding calculator
The Tax Cuts and Jobs Act made several sweeping changes regarding both personal and dependent exemptions and enhancements to the child tax credit. These changes will go into effect next year during the 2018 tax season.

The following groups should check their withholding status and provide updates:
  • Two-income families.
  • People with two or more jobs at the same time or who only work for part of the year.
  • People with children who claim credits such as the Child Tax Credit.
  • People who itemized deductions in 2017.
  • People with high incomes and more complex tax returns.

Other complicated financial situations should also revise their current W-4. Click here to review Form W-4 changes.

More Changes to Come?


We can all expect more updates and changes in legislation in the upcoming year according to the IRS. Our team at ACAwise is closely following all news and information released. Share this post and comment below with any question you may have about ACAwise or the IRS updates.