While changes in the tax law may have increased your take-home pay, you could experience an unexpected surprise when filing your 2018 tax returns next year. Now is a good time to review your W-4 forms and adjust your withholding if needed.The Internal Revenue Service (IRS) has issued the new Withholding Calculator, and the IAFF Financial Corporation (IAFF-FC) recommends you review your estimated tax withholdings for federal income taxes in 2018 with your employer (if you are an active employee) or with your retirement system (if you are a retiree).Reviewing and updating your tax withholdings is particularly important this year given the recent tax reform bill and the various changes to the taxation of personal income and to re-evaluate the amounts withheld from your paycheck and retirement benefits to avoid either over-withholding or significant under-withholding.The Withholding Calculator reflects, among other things, changes to tax brackets, itemized deductions, child tax credits, dependent credits and the repeal of dependent exemptions.The IRS has identified the following individuals who might potentially benefit from re-examining their current withholding:

• Two-income families
• People with two or more jobs at the same time or who only work for part of the year
• People with children who claim credits, such as the Child Tax Credit
• People who itemized deductions in 2017
• People with high incomes and more complex tax returns

The Withholding Calculator allows you to estimate income for 2018 and any tax credits and deductions you might be entitled for the year. It then calculates the estimated federal income tax for 2018 and provides specific recommendations on how to update your tax withholding so you have an appropriate amount withheld from your paycheck.

For retired members, special rules allow you to adjust withholding from your retirement benefit payments. However, if you choose not to withhold taxes from your benefit payments – or if you do not have enough federal income tax withheld from your benefit – you may be responsible for the payment of estimated tax.

Additionally, you may incur penalties under the estimated tax rules if your withholding or estimated tax payments do not satisfy IRS requirements. Withholding only applies to the taxable portion of your benefit payment. Generally, if you do not provide your retirement system with withholding information when you retire, the retirement system is required to withhold from a life annuity as if you are married and claiming three exemptions.

Additional information related to your tax withholding is available on the IRS website at www.irs.gov. The IAFF-FC recommends the following resources:

• Notice 1036 (2018 Withholding Tables)
• Publication 15 (Circular E): Employer’s Tax Guide (pp. 21-25)
• Publication 15-A: Employer’s Supplemental Tax Guide (pp. 12-15 and 24-30)

Withholding decisions can be complicated, especially considering the many changes under the new federal tax law. For additional questions regarding your tax withholding, consider contacting your employer/retirement system or your tax professional.