By Mary Westbrook
Labor Day weekend may be on your mind, but the Internal Revenue Service has a message for small-business owners: It’s time to think about your taxes.
“New changes to the federal income tax law resulting from the Tax Cuts and Jobs Act may have a major impact on whether a taxpayer has too little or too much federal income tax withheld,” said Mike Mudroncik, an IRS spokesperson. “The goal is to help the employees determine that the right amount of federal income tax is withheld for their specific situation.”
The current outreach is a result of the new law, which has caused some confusion — and mistakes could hurt your business in specific and potentially costly ways, cautioned Mudroncik.
“Having too little tax withheld from 2018 paychecks can lead to a large income tax payment due when the 2018 federal income tax return is filed with the IRS in 2019,” he explained. “Having too little withheld could also lead to the assessment of penalties. Having too much withheld can take away dollars that could be of use during the year.”
To provide clarification and guidance, the IRS has created a host of online tools, including:
- Understanding How to Use the IRS Withholding Calculator to Check & Correct Withholding. This webinar illustrates why some major segments of the population need to change their withholding soon and familiarizes tax professionals with how to use the IRS withholding calculator to help taxpayers change their withholding.
- Correcting Employment Taxes Using Form 941-X. Learn about when to use the Form 941X; statute of limitations for Form 941; differences between adjustments and claims; and finding the forms you need at IRS.gov.
- IRS “B” Notices and Backup Withholding. Learn what backup withholding is; who is responsible for backup withholding; when backup withholding is taken; and how backup withholding is reported.
Other resources and general information:
- Bookmark the IRS’s Tax Reform page on IRS.gov for the latest on tax reform topics.
- You can subscribe now to IRS Tax Tips to get the IRS’s Tax Reform Tax Tips
Derrick Myers,CPA, CFP outlined some of the major implications of the new tax law on small business in the February issue of Floral Management. Read more.
Mary Westbrook is the editor in chief of Floral Management.
