The IRS Has Released 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
New IRS 2018 Wage and Tax Guide
Minimum Wage |
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Minimum Wage
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$7.25
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Minimum Cash Wage (Tipped Employee)
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$2.13
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Maximum Tip Credit
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$5.12
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Youth Minimum Wage
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$4.25
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FICA (Medicare) |
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Maximum Taxable Earnings
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No Limit
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Employee/ Employer Tax Rate (Unchanged from 2017)
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1.45%
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Additional Medicare Tax Withholdings on Wages >$200,000 (No Employer Match)
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0.9%
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FICA (Social Security Tax) |
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Maximum Taxable Earnings
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$128,400
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Employee/Employer Tax Rate
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2.3%
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FUTA (Employer-Paid) |
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Maximum Taxable Earnings
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$7,000
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Percent of Taxable Wages
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6.0%
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Maximum Credit
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5.4%
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Normal Net Tax
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0.6%
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Supplemental Wage/ Bonus Rates |
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Flat Rate Withholding Method
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25%
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Pay Over $1 Million
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39.6%
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Health Savings Accounts |
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Self-Only Contribution Limit
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$3,450
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Family Contribution Limit
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$6,900
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Catch-Up Contribution Limit
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$1,000
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Retirement Plans |
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Contribution Limit
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$18,500
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Catch-up Contribution Limit
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$6,000
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State Payroll Tax
South Carolina Tax Guide
State Income Tax |
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Wage Withholding
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Tables
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Supplemental Wage/ Bonus Rate
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7.0%
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Unemployment Insurance |
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Maximum 2018 Taxable Earnings
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$14,000
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Employee Deduction
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None
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Employer 2018 Tax Rate
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0.06 – 5.46%
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Standard 2018 New Employer Rate
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1.09%
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Voluntary Contribution Permitted
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No
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Disability Insurance |
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Employee Deduction
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None
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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?
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.
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.
