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Wolters Kluwer Tax & Accounting Reviews Possible Under Withholding Exposure for Taxpayers, Causes, and Possible Remedies


Wolters Kluwer Tax & Accounting:

What: The Government Accounting Office (GAO) has issued a report
discussing the possible increase in the number of taxpayers who will not
have sufficient withholding taken out of their paychecks in 2018,
resulting in tax liabilities with their tax return and possible under
withholding penalties. GAO estimates that an additional three million
taxpayers will be under withheld this year as compared to 2017. Those
most likely to be newly affected are married couples with two children
filing a joint return with income around $180,000 and who claim itemized
deductions. The possibility of increased under withholding for 2018
results from the withholding tables developed by the IRS for 2018 and
the tax changes made by the Tax Cuts and Jobs Act.

Why: Taxpayers who may be subject to under withholding should
review their tax situation and consider filing a revised W-4 with their
employer to increase withholding for the remainder of the year. The
following outlines the causes for under withholding and possible
corrective actions taxpayers can take:

  • The 2018 withholding tables continued to use the projected value of
    the personal exemption as the value for the withholding allowance even
    though the personal exemption had been repealed for 2018
  • The withholding tables adjusted for the Tax Cuts and Jobs Act changes
    to the tax rates, the standard deduction, and the personal exemption,
    but not for changes to itemized deductions
  • Changes to a taxpayer's itemized deductions can only be reflected in
    withholding by filing a revised Form W-4 with an employer claiming
    fewer withholding allowances for itemized deductions
  • The Form W-4 also permits employees concerned about under withholding
    to specify an additional dollar amount to be withheld from each

Who: Tax expert Mark Luscombe, JD, LL.M, CPA, Principal Federal
Tax Analyst at Wolters Kluwer Tax & Accounting, is available to discuss
taxpayers most likely to be affected by under withholding and what can
be done to correct the problem.

Contact: To arrange interviews with Mark Luscombe or other
federal and state tax experts from Wolters Kluwer Tax & Accounting on
this or any other tax-related topics, please contact:

347-931-1055 847-267-2046

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