IRS YouTube Videos:

• Paycheck Checkup — English
• IRS Withholding Calculator Tips — English
• Do I Need to Fill Out a New W-4? — English

WASHINGTON – Launching a special week of activities, the Internal Revenue Service today continued its effort to encourage taxpayers to do a “paycheck checkup” to make sure they have the right amount of tax taken out of their paychecks for their personal situation.

To help taxpayers understand the implications of the Tax Cuts and Jobs Act, the IRS unveiled several new features to help people navigate the issues affecting withholding in their paychecks. The effort includes a new series of plain language Tax Tips, a YouTube video series and other special efforts to help people understand the importance of checking their withholding as soon as possible.

“The IRS is taking special steps to help taxpayers understand these tax law changes,” said Acting IRS Commissioner David Kautter. “We encourage people to do a paycheck checkup to help make sure they’re having the right amount of tax withheld for their unique personal situation. To help with this, the IRS has added and updated a variety of tools and information to help taxpayers.”

The new tax law could affect how much tax someone should have their employer withhold from their paycheck. To help with this, the IRS urged taxpayers to visit the Withholding Calculator on IRS.gov. The Withholding Calculator can help prevent employees from having too little or too much tax withheld from their paycheck. Having too little tax withheld can mean an unexpected tax bill or potentially a penalty at tax time in 2019. And with the average refund topping $2,800, some taxpayers might prefer to have less tax withheld up front and receive more in their paychecks.

Taxpayers can use the Withholding Calculator to estimate their 2018 income tax. The Withholding Calculator compares that estimate to the taxpayer’s current tax withholding and can help them decide if they need to change their withholding with their employer.  When using the calculator, it’s helpful to have a completed 2017 tax return available.

Taxpayers who need to adjust their withholding will need to submit a new Form W-4, Employee’s Withholding Allowance Certificate, to their employer. If an employee needs to adjust their withholding, doing so as quickly as possible means there’s more time for tax withholding to take place evenly during the rest of the year. But waiting until later in the year means there are fewer pay periods to make the tax changes – which could have a bigger impact on each paycheck.

Information on “Paycheck Checkup” Available in Several Ways 

The IRS is launching a sweeping effort to advise taxpayers about the importance of doing a “paycheck checkup” as soon as possible. In addition to updating the Withholding Calculator and issuing a new Form W-4, the agency is collaborating with tax professionals, partner organizations, employers, community groups and the tax and payroll industries to educate employers and employees about the importance of checking their withholding.

The IRS is also taking additional steps this week:

• Launching a series of Tax Reform Tax Tips, an addition to the IRS’s Tax Tips email-subscription program. These tips will begin this week and continue through 2018. Written in plain language, they can help taxpayers learn about major tax reform topics in understandable terms. The special series begins this week with daily tips covering withholding topics. The series will highlight other law changes in the weeks and months ahead, and taxpayers can subscribe on IRS.gov.
• Issuing a special news release series. During the series, the IRS will focus on some of those groups most likely to be affected by the withholding changes and how the new law may affect their tax situation.
• Sharing new YouTube videos to walk taxpayers through what they need to know about withholding, the Withholding Calculator and filling out a new Form W-4, if needed.
• Using social media to spread the word about #PaycheckCheckup.

Who Needs a Paycheck Checkup

The IRS always recommends employees check their withholding at the beginning of each year or when their personal circumstances change to make sure they’re having the right amount of tax withheld from their paychecks. With the new tax law changes, it’s especially important for certain people to use the Withholding Calculator on IRS.gov to make sure they have the right amount of withholding.

Among the groups who should check their withholding are:

• Two-income families.
• People working two or more jobs or who only work for part of the year.
• People with children who claim credits such as the Child Tax Credit.
• People with older dependents, including children age 17 or older.
• People who itemized deductions in 2017.
• People with high incomes and more complex tax returns.
• People with large tax refunds or large tax bills for 2017.

The law increased the standard deduction, removed personal exemptions, increased the child tax credit, limited or discontinued certain deductions and changed the tax rates and brackets.

When personal circumstances change that reduce withholding allowances they are entitled to claim, including divorce, starting a second job, or a child no longer being a dependent, an employee has 10 days to submit a new Form W-4 to their employer claiming the proper number of withholding allowances.

After Using the Withholding Calculator, Change Withholding by Submitting New Form W-4

Taxpayers can use the results from the Withholding Calculator to determine if they should complete a new Form W-4, Employee’s Withholding Allowance Certificate, and, if so, what information to put on it.

If changes to withholding should be made, the Withholding Calculator gives employees the information they need to fill out a new Form W-4. Employees will submit the completed Form W-4 to their employer.

For more details on withholding issues, taxpayers are encouraged to visit IRS.gov.

More information:

• Withholding
• Withholding Calculator FAQs

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WASHINGTON —The Internal Revenue Service reminded taxpayers today that it’s not too late to contribute to an Individual Retirement Arrangement (IRA) and still claim it on a 2017 tax return. Anyone with an IRA may be eligible for a tax credit or deduction on their 2017 tax return if they make contributions by April 17, 2018.

This is the sixth in a series of nine IRS news releases called the Tax Time Guide, designed to help taxpayers navigate common tax issues. This year’s tax-filing deadline is April 17.

An IRA is designed to enable employees and the self-employed to save for retirement. Most taxpayers who work are eligible to start a traditional or Roth IRA or add money to an existing account.

Contributions to a traditional IRA are often tax deductible, but distributions are generally taxable. Contributions to a Roth IRA are not deductible, but qualified distributions are tax-free. To count for a 2017 tax return, contributions must be made by April 17, 2018. In addition, low- and moderate-income taxpayers making these contributions may also qualify for the Saver’s Credit.

Generally, eligible taxpayers can contribute up to $5,500 to an IRA. For someone who was 50 years of age or older at the end of 2017, the limit is increased to $6,500. The same general contribution limit applies to both Roth and traditional IRAs. However, a Roth IRA contribution might be limited based on filing status and income. An individual can’t make regular contributions to a traditional IRA in the year they reach 70½ and older. However, they can still contribute to a Roth IRA and make rollover contributions to a Roth or traditional IRA regardless of age.

If neither the taxpayer nor their spouse was covered for any part of the year by an employer retirement plan, they can take a deduction for total contributions to one or more traditional IRAs up to the contribution limit or 100 percent of the taxpayer’s compensation, whichever is less.

For 2017, if a taxpayer is covered by a workplace retirement plan, the deduction for contributions to a traditional IRA is generally reduced if the taxpayer’s modified adjusted gross income is between:

• $0 and $10,000; married filing separately
• $62,000 and $72,000; single and head of household
• $99,000 to $119,000; married filing jointly or a qualifying widow(er)
• $186,000 to $196,000; married filing jointly where the IRA contributor is not covered by a workplace retirement plan but is married to someone who is covered

The deduction for contributions to a traditional IRA is claimed on Form 1040, Line 32, or Form 1040A, Line 17. Any nondeductible contributions to a traditional IRA must be reported on Form 8606.

Even though contributions to Roth IRAs are not tax deductible, the maximum permitted amount of these contributions is phased out for taxpayers whose modified adjusted gross income is above a certain level:

• $0 to $10,000; married filing separately
• $118,000 to $133,000; single and head of household
• $186,000 to $196,000; married filing jointly

For detailed information on contributing to either Roth or Traditional IRAs, including worksheets for determining contribution and deduction amounts, see Publication 590-A, available on IRS.gov.

Also known as the Retirement Savings Contributions Credit, the Saver’s Credit is often available to IRA contributors whose adjusted gross income falls below certain levels. Eligible taxpayers get the credit even if they qualify for other retirement-related tax benefits. Like other tax credits, the Saver’s Credit can increase a taxpayer’s refund or reduce the taxes they owe. The amount of the credit is based on several factors, including the amount contributed to either a Roth or traditional IRA and other qualifying retirement programs.

For 2017, the income limit is:

• $31,000; single and married filing separate
• $46,500; head of household
• $62,000; married filing jointly.

Taxpayers should use Form 8880 to claim the Saver’s Credit, and its instructions have details on figuring the credit correctly.

Taxpayers can find answers to questions, forms and instructions and easy-to-use tools online at IRS.gov 24 hours a day, seven days a week. No appointments required and no waiting on hold.

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Taxpayers who give money or goods to a charity may be able to claim a deduction on their 2017 federal tax return, which basically reduces the amount of their taxable income. Here are some important facts about charitable donations:

• Qualified charities. To receive a deduction, taxpayers must donate to a qualified charity. To check the status of a charity, use the IRS Select Check tool. Here are examples of things that taxpayers can’t deduct:
  • Gifts to individuals
  • Donations to political organizations and candidates
• Itemize deductions. To deduct donations, taxpayers must file Form 1040 and itemize deductions using Schedule A.
• Benefit in return. Taxpayers can only deduct the amount of their donation that exceeds the fair market value of the benefit received. If taxpayers get something in return for their donation, they may have to reduce their deduction. Examples of benefits include merchandise, meals and tickets to events.
• Property donation. If taxpayers give property instead of cash, they can normally only deduct the item’s fair market value. Fair market value is generally the price they’d get for the property on the open market. Used clothing and household items donated must generally be in good condition or better. Special rules apply to cars, boats and other types of property donations.
• Form to File. Taxpayers file Form 8283 for all non-cash gifts totaling more than $500 for the year.
• Proof of Donation. If taxpayers donated cash or goods of $250 or more, they must have a written statement from the charity. The statement must show:
  • Amount of the donation.
  • Description of any property given.
  • Whether the donor received any goods or services in exchange for the gift.

Additional resources:

• Charitable Contributions 
• Publication 561, Determining the Value of Donated Property
• Publication 526, Charitable Contributions
• Interactive Tax Assistant: Can I Deduct My Charitable Contributions?

IRS YouTube videos:

Charitable Contributions – English | Spanish | ASL

Share this tip on social media — #IRSTaxTip: Top Things to Know About Deducting Charitable Contributions on a 2017 Tax Return. https://go.usa.gov/xnhya

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