The new tax reform goes into effect this year.
You may be getting more in your pocket, but the government wants you to double-check your paycheck.
On Thursday, the federal government released the new tax withholding table to adjust your paychecks accordingly.
Employers have until Feb. 15 to make that adjustment. If it’s not changed, then they may be withholding too much tax.
Michelle Wells-Nagamine of Hawaii Payroll Services says the difference is that in 2018, many people are getting taxed at a lower rate and lower percentage versus last year.
To give you an idea of how much more, let’s say you’re single and making a $1,000 per paycheck.
Without calculating deductions and other exemptions, your federal tax withholding was $116.20 last year. This year, it could be $93.58. That’s a $22 increase in your check.
The IRS is supposed to have an online tool for people to make sure their employers are withholding the right amount, but that calculator isn’t available yet.
Wells-Nagamine says you should still look at your pay stub.
“Understand your pay stub. Understand where your deductions are, what type of deductions that you have, are they pre-taxed,” said Wells-Nagamine.
While you may start to see more money come in, Wells-Nagamine says you should save some of it, because they don’t know how the tax bracket will change when it’s time to file your tax return.
“When we had the stimulus package during the Obama’s administration, they put more back into our pocket, but when it came time to file your return, those tables weren’t adjusted, so a lot of people ended up having to pay more taxes when they filed their tax return,” said Wells-Nagamine.
Her advice to others: “Just be aware that although you have more in your pocket right now, you might want to hold on to it for a little bit before you start spending it all, just in case the tables aren’t adjusted when you file your tax return.”