Author Topic: 2018 Withholding Schedule  (Read 1016 times)

Octotat

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2018 Withholding Schedule
« on: February 20, 2018, 06:09:09 AM »
My company just advised us that they have changed tax withholding according to the newly issued Federal witholding guideline.  They stated we do NOT need to change our exemptions unless we want to for other reasons.  My paycheck is showing almost $800/month more now.   

I currently had my witholdings so that I was always +/- $1000 refund or tax bill when I file.

My question is, are these reduced witholdings due to the lowered taxes, or am I going to get a nasty suprise next spring when I file?

Thanks,
Octo

terran

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Re: 2018 Withholding Schedule
« Reply #1 on: February 20, 2018, 07:46:12 AM »
Whether or not you get a nasty surprise (in terms of a penalty) is entirely dependent on whether you underpay, and if so, whether you meet one of the safe harbors:
  • Owe less than $1000
  • Paid at least 90% of the amount owed in the current year
  • Paid at least 100% (110% if AGI is over $150k) of the amount owed in the previous year

The 2018 tax brackets are
RateSingleMarried Filing Jointly
10%Up to $9,525Up to $19,050
12%$9,526 to $38,700$19,051 to $77,400
22%38,701 to $82,500$77,401 to $165,000
24%$82,501 to $157,500$165,001 to $315,000
32%$157,501 to $200,000$315,001 to $400,000
35%$200,001 to $500,000$400,001 to $600,000
37%over $500,000over $600,000

So subtract $12k single / $24k married filing jointly from your expected income after payroll deductions (401k, health insurance, HSA/FSA, etc), find your bracket, subtract the lower end of the bracket from your income, multiply by that bracket, subtract the lower end from the upper end of each lower bracket and add that amount to your total tax due.

If you expect to have more than 12k/24k in itemized deductions subtract that instead of $24k. Remember that many itemized deductions have been eliminated or reduced.

If you're especially high income you may have extra medicare taxes or you may be subject to the Alternative Minimum Tax.

Octotat

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Re: 2018 Withholding Schedule
« Reply #2 on: February 20, 2018, 08:37:04 AM »
Thanks.  I'll run those numbers, but shouldn't be looking at any penalties.  I never have much deductions, so it's always the standard deduction for me.


Octotat

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Re: 2018 Withholding Schedule
« Reply #3 on: February 21, 2018, 06:30:16 AM »
After some digging, the additional amount not only reflected the withholding change for that check, but the retroactive amounts for the previous checks in  2018 that hadn't been adjusted to the new schedule.