In response to the Tax Cuts and Jobs Act (TCJA) signed into law in December of last year, the IRS issued updated income-tax withholding tables earlier this year. As a result of the changes, many employees may already have noticed a significant reduction in the amount of federal taxes withheld on their paychecks.
Keep in mind, less taxes withheld from your paycheck does not necessarily mean less federal taxes will be owed at tax time.
All employees should review their withholding elections and make any updates as necessary to minimize the risk of receiving a larger-than-expected tax bill or a tax penalty on April 15.
We strongly encourage using the IRS Withholding Calculator or consulting with your tax advisor to help determine the best withholding allowances for you and your family. You will need your most recent payslip (found by using the Pay worklet in Workday) and a copy of last year’s tax return to use the calculator. Additional information can be found in the IRS’s recently released Publication 5307, Tax Reform Basics for Individuals and Families.
If you do wish to make changes to your withholding elections, you can do so at any time by following the steps in our Update Federal Withholding Elections User Guide.
Reviewing your withholding elections each year is always good practice, but with the recent tax changes, this year is more imperative than usual. The IRS has announced that reviewing withholding elections is particularly important for employees who:
- Are a two-income family
- Have two or more jobs at the same time
- Work a seasonal job or only work part of the year
- Claim credits like the child tax credit
- Have dependents age 17 or older
- Itemized deductions on their 2017 returns
- Have high income or a complex tax return
- Had a large tax refund or tax bill for 2017
If you have any questions about updating your withholding elections in Workday, please feel free to email us at email@example.com. However, the ISC cannot offer tax advice or assist in determining withholding elections.