If you have been itemizing deductions on your 1040, you may be affected by changes from the Tax Cuts and Jobs Act. You should take a few minutes to use the IRS Withholding Calculator to make sure your employer is withholding the appropriate amount of tax from your paychecks for your financial situation.

Some of the changes that may affect you. 

- Limiting the deductions for state and local taxes

- Limiting the deduction for home mortgage interest in certain cases (see IR-2018-32 for more information)

- Excluding deductions for employee business expenses, tax preparation fees and investment expenses, including investment management fees, safe deposit box fees and investment expenses from pass-through entities

The new tax law nearly doubled the standard deduction, and changed several itemized deductions. If you formerly itemized, you may now find it more beneficial to take the standard deduction, and this could affect how much you need to have your employer withhold from your pay. Even if you continue to itemize deductions, you should check your withholding because of changes made by the new law. Having too little tax withheld could result in an unexpected tax bill or penalty at tax time. 

When using the IRS Withholding Calculator, you can indicate whether you are taking the standard deduction or itemizing deductions. If you are itemizing, you’ll enter estimates of your deductions. The Withholding Calculator applies the new law to these amounts when figuring your withholding. It’s helpful to have your completed 2017 tax return when using the Withholding Calculator. It can help you estimate the amount of income, deductions, adjustments and credits to enter. You’ll also need your most recent pay stubs. These help the calculator compute your withholding so far this year.

You can use the results from the Withholding Calculator to help determine if you should complete a new Form W-4 and, if so, what information to put on a new Form W-4. If you need to complete a new Form W-4, you should submit it to your employer as soon as possible. 

As a general rule, the fewer withholding allowances on the Form W-4, the higher your tax withholding will be. Entering “0” or “1” on line 5 of the W-4 means more tax will be withheld. Entering a bigger number means less tax withholding, resulting in a smaller tax refund or potentially a tax bill or penalty.

The IRS Withholding Calculator does not request personally-identifiable information, such as name, Social Security number, address or bank account numbers. The IRS does not save or record the information you enter on the calculator. As always, watch out for tax scams, especially via email or phone, and be alert to cybercriminals impersonating the IRS. The IRS does not send emails related to the Withholding Calculator or the information entered.