Tuesday August 21, 2018
Two-Income Families Benefit from "Paycheck Checkup"
Many two-income families will be able to change or reduce withholding due to the passage of the Tax Cuts and Jobs Act (TCJA). The TCJA increased the standard deduction to $24,000 for couples. It also eliminated personal exemptions, increased the Child Tax Credit and changed both the tax rates and brackets.
If you and your spouse have two or more sources of income, you could be overwithholding or underwithholding. The "Paycheck Checkup" is especially useful with two-income families because it shows the best withholding amounts for your specific situation.
To use the Withholding Calculator, you should have your 2017 tax returns and a recent paystub for both spouses. To protect your identity, the Withholding Calculator does not ask for your name, Social Security Number, address or bank account numbers. It also does not save or record the data you enter.
After you use the Withholding Calculator and enter the requisite information, you may need to contact your employer to update your IRS Form W-4. Your employer will use the new Form W-4 with your updated withholding allowances to adjust the amounts withheld from your paycheck.
With the increased $24,000 standard deduction, many couples with two incomes will be able to reduce withholding and increase their monthly take-home amounts.