It is official, President Donald Trump’s Tax Cuts and Jobs Act (TCJA) has swept across the land, and your employees probably have a few questions. As their trusty employer, your employees are looking to you for answers. So how has the 2018 tax reform affect your paychecks?
We understand that you want to give your team correct information without overwhelming them with IRS and tax jargon or mind-numbing complexities. Thankfully, your friends at PayWow know your struggles so to help with this task we wrote this blog for the common man (or woman), not your CPA.
How Has The 2018 Tax Reform Affected Your Paychecks
Before we dive into how The Tax Cuts and Jobs Act affects your employees’ paychecks, let’s quickly review the new implemented 2018 Tax Reform.
2018 Tax Reform Overview
On December 22 President Trump signed the Tax Cuts and Jobs Act after the House passed the tax bill with a historic party-line vote. This tax reform bill reduces the federal budget deficit by approximately $318 billion.
The Tax Cuts and Jobs Act lowers the individual rate for nearly every tax bracket. These cuts mean the majority of your employees will have less federal taxes withheld. This means your employee’s will take-home more money at the end of the day. On average most employees will take home approximately $50 more each pay period.
The 2018 tax reform act became the standard, effective January 1st, with the first significant change being the release of the IRS 2018 Income Withholding Tables.
Questions Your Employees May Ask – And How to Respond
Your friendly writing team here at PayWow are not mind readers, but here are a few questions your employees may ask:
Does the Tax Cuts and Jobs Act affect my 2017 Income Tax Return?
Nope. The changes will affect your paychecks and taxes after January 1, 2018. Meaning these changes will affect next year’s tax returns the 2018 income tax return.
When will the 2018 Tax Reform affect my paycheck?
You should have seen a change in wages or federal withholdings between mid-January and mid-February. (But this depends on when you, the employer, implemented the new withholding table.)
Guaranteed Tax Compliance
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