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Tax Withholding Estimator

Posted 8/8/2019

The IRS encourages everyone to use the Tax Withholding Estimator to perform a quick “paycheck checkup.”  This is even more important following the recent changes to the tax law for 2018 and beyond.

The Estimator helps you identify your tax withholding to make sure you have the right amount of tax withheld from your paycheck at work.

There are several reasons to check your withholding:

  • Checking your withholding can help protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time next year. 
  • At the same time, with the average refund topping $2,800, you may prefer to have less tax withheld up front and receive more in your paychecks. 

If you are an employee, the Tax Withholding Estimator helps you determine whether you need to give your employer a new Form W-4, Employee's Withholding Allowance Certificate (PDF). You can use your results from the Estimator to help fill out the form and adjust your income tax withholding.  If you receive pension income, you can use the results from the estimator to complete a Form W-4P (PDF) and give it to your payer.

Plan Ahead: Tips For Using This Program

The Estimator will ask you to estimate values of your 2019 income, the number of children you will claim for the Child Tax Credit and Earned Income Tax Credit, and other items that will affect your 2019 taxes. This process will take a few minutes.

  • Gather your most recent pay stubs.
  • Have your most recent income tax return handy; a copy of your completed Form 1040 will help you estimate your 2019 income and other characteristics and speed the process. 
  • Keep in mind that the Estimator’s results will only be as accurate as the information you provide.  If your circumstances change during the year, come back to this Estimator to make sure that your withholding is still correct.
  • The Tax Withholding Estimator does not ask you to provide sensitive personally-identifiable information like your name, Social Security number, address or bank account numbers. The IRS does not save or record the information you enter on the Estimator.

IMPORTANT NOTE: This Tax Withholding Estimator works for most taxpayers. People with more complex tax situations should use the instructions in Publication 505, Tax Withholding and Estimated Tax (PDF). This includes taxpayers who owe alternative minimum tax or certain other taxes, and people with long-term capital gains or qualified dividends.

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Tax Withholding Estimator

To Change Your Withholding:

Special Note for 2020: If you follow the recommendations at the end of this Estimator and change your withholding for 2019, the IRS reminds you to be sure to recheck your withholding at the start of 2020. This is especially important if you reduce your withholding sometime during 2019. A mid-year withholding change in 2019 may have a different full-year impact in 2020. So if you do not file a new Form W-4 for 2020, your withholding might be higher or lower than you intend. To help protect against having too little withheld in 2020, we encourage checking your withholding again early in 2020.

If you have additional questions about your withholding, consult your employer or tax advisor.

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Are you an injured spouse? What can you do so you don't lose your refund?

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Posted 1/17/2019

What do you mean I am getting less money back from the IRS?  Here is why..    

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What to expect for refunds for you 2018 returns in 2019

Taxreform brings changes to fringe benefits that can affect an employer’s bottom line

Posted 10/18/2018

The IRS reminds employers that several programs have been affected as a result of the Tax Cuts and Jobs Act passed last year. This includes changes to fringe benefits, which can affect an employer's bottom line and its employees' deductions.

Here’s information about some of these changes that will affect employers:

Entertainment Expenses & Deduction for Meals
The new law generally eliminated the deduction for any expenses related to activities generally considered entertainment, amusement or recreation.
 
However, under the new law, taxpayers can continue to deduct 50 percent of the cost of business meals if the taxpayer or an employee of the taxpayer is present, and the food or beverages are not considered lavish or extravagant. The meals may be provided to a current or potential business customer, client, consultant or similar business contact. Food and beverages that are purchased or consumed during entertainment events will not be considered entertainment if either of these apply:

  • they are purchased separately from the entertainment
  • the cost is stated separately from the entertainment on one or more bills, invoices or receipts

Qualified Transportation
The new law also disallows deductions for expenses associated with qualified transportation fringe benefits or expenses incurred providing transportation for commuting. There is an exception when the transportation expenses are necessary for employee safety.

Bicycle Commuting Reimbursements
Under the new law, employers can deduct qualified bicycle commuting reimbursements as a business expense. The new tax law suspends the exclusion of qualified bicycle commuting reimbursements from an employee’s income. This means that employers must now include these reimbursements in the employee’s wages.
 
Qualified Moving Expenses Reimbursements
Employers must now include moving expense reimbursements in employees’ wages. The new tax law suspends the exclusion for qualified moving expense reimbursements.

There is one exception as members of the U.S. Armed Forces can still exclude qualified moving expense reimbursements from their income if they meet certain requirements.

Employee Achievement Award
Special rules allow an employee to exclude achievement awards from their wages if the awards are tangible personal property. An employer also may deduct awards that are
tangible personal property
, subject to certain deduction limits. The new law clarifies the definition of tangible personal property.

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Entertainment Expense Deductions

Posted 10/18/2018

Cross References
• Notice 2018-76
• IRC §274
The Tax Cuts and Jobs Act (TCJA) imposed new restrictions on a business expense deduction for entertainment expenses. Effective for 2018, the new law provides that no deduction is allowed with respect to:
1) An activity generally considered to be entertainment, amusement or recreation,
2) Membership dues with respect to any club organized for business, pleasure, recreation or other social purposes, or
3) A facility or portion thereof used in connection with any of the above items.
The law did not repeal the 50% deduction for business meals while the taxpayer is traveling on business.
The IRS recently issued new guidance on the deductibility of expenses for certain business meals associated with entertainment. The guidance announces that the IRS intends to publish proposed regulations under IRC section 274, which will include the guidance issued in Notice 2018-76.
Notice 2018-76 guidance. TCJA did not change the definition of entertainment under IRC section 274. Therefore, the regulations under IRC section 274(a)(1) that define entertainment continue to apply. TCJA did not address the circumstances in which food and beverages might constitute entertainment. Therefore, taxpayers may rely on Notice 201876 to determine whether a business meal is a deductible business meal subject to the 50% limit, or a nondeductible entertainment expense.
Under Notice 2018-76, taxpayers may deduct 50% of an otherwise allowable business meal expense if:
1) The expense is an ordinary and necessary expense under IRC section 162(a) paid or incurred during the tax year in carrying on a trade or business,
2) The expense is not lavish or extravagant under the circumstances,
3) The taxpayer, or an employee of the taxpayer, is present at the furnishing of the food or beverages,
4) The food and beverages are provided to a current or potential business customer, client, consultant, or similar business contact, and
5) In the case of food and beverages provided during or at an entertainment activity, the food and beverages are purchased separately from the entertainment, or the cost of the food and beverages is stated separately from the cost of the entertainment on one or more bills, invoices, or receipts. The entertainment disallowance rule may not be circumvented through inflating the amount charged for food and beverages.

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IRS issues notice on state and local tax deductions

Posted 9/20/2018

WASHINGTON — The U.S. Department of the Treasury and the Internal Revenue Service issued a notice today stating that proposed regulations will be issued addressing the deductibility of state and local tax payments for federal income tax purposes. Notice 2018-54 also informs taxpayers that federal law controls the characterization of the payments for federal income tax purposes regardless of the characterization of the payments under state law.

The Tax Cuts and Jobs Act (TCJA) limited the amount of state and local taxes an individual can deduct in a calendar year to $10,000. In response to this new limitation, some state legislatures have adopted or are considering legislative proposals allowing taxpayers to make payments to specified entities in exchange for a tax credit against state and local taxes owed.

The upcoming proposed regulations, to be issued in the near future, will help taxpayers understand the relationship between federal charitable contribution deductions and the new statutory limitation on the deduction of state and local taxes.

Taxpayers should also be aware the U.S. Department of the Treasury and the Internal Revenue Service are continuing to monitor other legislative proposals being considered to ensure that federal law controls the characterization of deductions for federal income tax filings.

The limitation imposed by the TCJA applies to taxable years beginning after Dec. 31, 2017 and before Jan. 1, 2026.

Updates on the implementation of the TCJA can be found on the Tax Reform page of IRS.gov.

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Taxpayers can connect with the IRS on their phone using IRS2Go

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Posted 2/23/2018

The 'IRS' has apparently issued a warrant for my arrest

 

CNBC

Jim Pavia11 hrs ago

The Internal Revenue Service has apparently issued an arrest warrant "on my name."

At least that was the ominous message left on my answering machine Wednesday morning. This was the exact message:

"Hello, this call is an official note from IRS, the Internal Revenue Service. The reason of this call is to inform you that IRS is filling [sic] a lawsuit on your name because you have tried to do a fraud with the IRS and we are taking illegal [sic] action and we are issuing a legal arrest warrant on your name. To get more information regarding this case file, just call us back on our department number, 708-432-8161."

I decided to play along, knowing I would never give these scammers any information. So I called the number, and a person answered. "Hello, IRS," he said. I laughed into the phone and gave him a few choice words that cannot be repeated here. I called back an hour later, and this time I got a recorded message stating that I had reached the IRS.

I started going through a menu of options and was actually transferred to a call center where a man began discussing my "case file" so he could help me avoid a lien being placed on my assets. I asked whom I was speaking with and also pointed out he had no idea whom he was talking to, because he never even asked my name — so how could he possibly know my "case file"?

Without hesitation, he asked me to give him my Social Security number so we could verify it with the one in my "case file." I questioned how the IRS can demand that I pay taxes without giving me the opportunity to question or appeal the amount they say that I owe. I then asked him for his name and his IRS identification number. I was disconnected.

I contacted the IRS about the unsolicited call from the scammer who left the threatening message. The IRS representative said that, despite warnings, people still readily give out personal data and fall into the traps of these scammers.

To that point, the Treasury Inspector General for Tax Administration reports that more than 10,000 victims have collectively paid in excess of $54 million as a result of phone scams since October 2013.

So while it may seem obvious, here goes: Never, ever give out personal financial information — such as Social Security numbers or credit card and bank account numbers and passwords — to anyone who calls you, claiming to be from the IRS.

The IRS reminds taxpayers that IRS impersonation scams continue year-round and that they tend to peak when scammers find prime opportunities to strike. These scammers will be aggressive and use threatening phone calls while impersonating IRS agents, and the scams remain a major threat to taxpayers.

Here are some things scammers, but never the IRS, often do. Any one of these four things is a telltale sign of a scam:

1. Call to demand immediate payment using a specific payment method, such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.

2. Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.

3. Demand that taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.

4. Ask for credit or debit card numbers over the phone.

For more information on reporting tax scams, go to IRS.gov and type "scam" in the search box.