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- Apr 14, 2006
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- 23,183
If you are still employed, you may have noticed a bump in your check last month as the new withholding tables kicked in. Certainly nice to get more money, but it could be a trap for the unwary.
I expect our AGI for 2018 will be almost exactly the same as 2017. I ran a pro forma tax return taking into account the changes in the tax brackets on the one hand and the loss of deductions/exemptions on the other (i.e. switch to the new standard deduction). Based on that exercise, I expect that our tax bill in 2018 will be almost the same as it was in 2017.
However, the new withholding rate would leave us almost $5000 short of that expected bill and we'd have to write a big check next April. Not a huge problem for us, but I bet it will be for many people. Coming up that short could also trigger under-withholding penalties. To compensate, I just changed our W-4's to take $100 extra withholding from each of our paychecks.
So, for those still employed, my public service announcement for today is to run your 2018 taxes under the new law and make sure your withholding will cover them. Change your W-4 as necessary. The earlier you do this, the smaller the needed change will be. This might be even more important for your adult children.
I expect our AGI for 2018 will be almost exactly the same as 2017. I ran a pro forma tax return taking into account the changes in the tax brackets on the one hand and the loss of deductions/exemptions on the other (i.e. switch to the new standard deduction). Based on that exercise, I expect that our tax bill in 2018 will be almost the same as it was in 2017.
However, the new withholding rate would leave us almost $5000 short of that expected bill and we'd have to write a big check next April. Not a huge problem for us, but I bet it will be for many people. Coming up that short could also trigger under-withholding penalties. To compensate, I just changed our W-4's to take $100 extra withholding from each of our paychecks.
So, for those still employed, my public service announcement for today is to run your 2018 taxes under the new law and make sure your withholding will cover them. Change your W-4 as necessary. The earlier you do this, the smaller the needed change will be. This might be even more important for your adult children.
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