I get paid on 05-Jan-2018 for the period ending 31-Dec-2017. Will that check reflect the new tax laws, or the old?
What if the pay period straddles the calendar year?
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The rule is the pay check with a pay date of January 2018 is 2018 income even if all or some of the work was done in 2017. That means all the money withheld for 401K, Flex spending or HSA funds are 2018 funds.
Now for the new law. The IRS has to update the withholding schedules.
December 26, 2017
The IRS is working to develop withholding guidance to implement the tax reform bill signed into law on December 22. We anticipate issuing the initial withholding guidance in January, and employers and payroll service providers will be encouraged to implement the changes in February. The IRS emphasizes this information will be designed to work with the existing Forms W-4 that employees have already filed, and no further action by taxpayers is needed at this time. Use of the new 2018 withholding guidelines will allow taxpayers to begin seeing the changes in their paychecks as early as February. In the meantime, employers and payroll service providers should continue to use the existing 2017 withholding tables and systems.
Dec. 13, 2017
The IRS is continuing to closely monitor the pending legislation in Congress, and we are taking the initial steps to prepare guidance on withholding for 2018. We anticipate issuing the initial withholding guidance (Notice 1036) in January reflecting the new legislation, which would allow taxpayers to begin seeing the benefits of the change as early as February. The IRS will be working closely with the nation's payroll and tax professional community during this process.
The IRS emphasizes this information will be designed to work with the existing Forms W-4 that employees have already filed, and no further action by taxpayers is needed at this time.
is interesting. You should make sure that the change in tax law doesn't significantly change the number of allowances you should put on the new W4 and result in under withholding if you don't update. For example a family that went from itemizing to non-itemizing could have too many allowances on the form.
It will be interesting if there is a change in the rules regarding under withholding due to peoples uncertainty regarding all the changes.
Since you received the income in 2018 you would declare in on your 2018 tax return. That said...
It will be mid-January before new withholding schedules are released that reflect the changes in exemptions and tax brackets, and a few weeks or so for all pay systems to adjust to the new withholding schedules, so most likely it would reflect the 2017 schedules out of practicality, not because of any laws or regulations.
However, in the end it likely won't make much difference. All that will change is what's withheld from your paycheck. What will matter is the tax that is actually owed when you file. Your total withholdings will be subtracted from the total tax due for the year, which will determine if you either owe tax when you file or will get a refund.
Withholdings are just an estimate anyways, so I wouldn't expect companies to spend a lot of time and resources dealing with withholdings on up to 4% (2/52) of the total year that will only change marginally for most people.