The Tax Cuts and Jobs Act of 2017 made sweeping changes to the tax code of the United States. Let's see how it affects you and your employees for tax year 2020!
Check out the video below to learn more and make sure to reach out to us at firstname.lastname@example.org!
Eric Jones: Hi everybody and welcome to this month's Insight Beyond Payroll. My name's Eric Jones and this is...
Chilah Weller: Chilah Weller.
Eric Jones: And we are two of the owners of Workforce PayHub, Your local payroll time and attendance and human resource information provider. Chilah, it's 2020. Some changes.
Chilah Weller: Wow. What does that mean there? What kind of changes?
Eric Jones: So I don't know if everyone was paying attention to the Tax Cuts and Jobs Act of 2017, but it predicated a new W-4 for 2020.
Chilah Weller: fantastic. So including on this form, you are now allowed to report additional income and additional deductions. We have done away with personal exemptions. So this is a key difference from prior years.
Eric Jones: And one of the things we've noticed with our clients over the last few weeks asking questions about this new W-4 is, where did the exemptions go? Well, the exemptions are still kind of there. With this new law, they've enacted a $2,000 credit per child under the age of 17. And then for everybody else, there's a $500 tax credit. Now these are not exemptions, these are actually right off the bottom line taxes. So if you owe $10,000 and you've got two kids, that's $4,000 off. So the new tax tables take into account dollar amounts and not exemption quantity. So another thing I wanted to make note of is the new W-4, when you actually use the new W-4 amounts, it is actually drastically reducing almost across the board, the amount of federal taxes actually coming out. Now, why is that important? Well, some people like to have a little bit higher paycheck every week and that's great. However, it could leave you owing at the end of the year. Or if you're used to getting a few thousand dollar refund, that could almost be taken away.
Chilah Weller: Yeah, and this is all due to the new tax tables that are now enacted. So as Eric had said, I encourage you to go out there and talk to your employees and look at your own withholdings and make the proper adjustments.
Eric Jones: And the IRS has actually created an updated withholding calculator that employees can actually go to and figure out their withholding amounts that need to be. We'll include that link in the description. If this is something that you need more assistance with, please don't hesitate to contact us at (517)-759-4026, or you can email us at email@example.com.
Chilah Weller: Happy new year, everyone.
Eric Jones: Happy new year.
Chilah Weller: Job. What's Trump's thing? It's called tech. It's Jobs Act. It's the Jobs Act. I love Google.
Eric Jones: Okay. Here, just going to cut that.
Chilah Weller: Just so you know. Here we go.
Eric Jones: Hi everybody and happy new year. Eric Jones with Workforce PayHub and the lovely...
Chilah Weller: Chilah Weller.
Eric Jones: And we are two of the owners of Workforce PayHub.
Chilah Weller: You just said Workforce PayHub. He's not...
Eric Jones: Dwight, we can't have third party audible audio here.
Chilah Weller: You said it...
Eric Jones: I know I say it twice because... Just reset. Reset.
Chilah Weller: Oh, that's great. Okay. One more time.