withholding

REM Cycle Review: Unexpected DNA kits and spousal support

At last, the moment you’ve been waiting for all week—the latest installment of the REM Cycle Review, the only weekly tax roundup compiled by a penguin who consumes nothing but Red Bull and burritos. (You’ve got to lay off the Red Bull, Crystal. It’s starting to get weird.) We’ve got lots of tax tidbits to get you through these cold winter nights, plus this week’s staff video picks. Join us, won’t you?

Spousal support after a divorce? There’s a new tax rule for that. A more in-depth, less pun-laden look at the new divorce rules under the Tax Cuts and Jobs Act (TCJA) than last week’s article on the Jeff and MacKenzie Bezos split. [Business Insider]

Withholding and estimated tax payments fall short? The IRS may waive your penalty. In a move sure to relieve many, the IRS announce this week that it will waive the estimated tax penalty for many taxpayers whose withholding and estimated tax payments fell short of their total tax liability for the year. [IRS.gov]

Surprising absolutely no one, student loan debt keeps young people from buying homes. The Federal Reserve commissioned a long-term study to figure out why millennials weren’t buying houses. As it turns out, $1.5 trillion ($1,500,000,000,000—that’s eleven zeroes, for those playing along at home) in education-related loans is an “important factor.” [CNBC]

Unexpected DNA test kits + hackers + $10 Amazon gift cards = FRAUD. It’s weird enough to receive a DNA test kit in the mail you didn’t order. Weirder still if you discover the kit was ordered by someone you don’t know, who used a stolen credit card number in order to do it. The weirdness reaches M.C. Escher levels when it’s revealed all this nefarious naughtiness was committed in the name of… getting a ten-dollar gift card for Amazon? Uhhh… seriously? [USA Today]

Today, January 18, is National Thesaurus Day. National Thesaurus Day is observed annually on January 18 in honor of Peter Mark Roget (1779-1869), creator of Roget’s Thesaurus. Today, the thesaurus is also celebrated, appreciated, valued, treasured, esteemed, and held in high regard. [National Day Calendar]

This week we’re watching…

The REM Cycle editorial staff recommends one professional development video and one funny or thought-provoking video each week.

Former FBI hostage negotiator Christopher Voss created his company Black Swan based on the skills learned as a negotiator in hostage situations.

DNA tests you can take with do-it-yourself kits sent right to your home are more popular than ever, but how well do they really work?

Thanks to astute reader Greg Lavin for pointing out the correct number of zeroes in a trillion. We send him a trillion thanks and good wishes.

The REM Cycle Review is a weekly compilation of newsworthy articles pertaining to taxation, accounting, and life in general.

Got a hot tip? Email us at REMCycle@rem-co.com.

WAKE UP WITH REM: Tesla, blockchain to control use of consumer data, and a wombat who just wants to play

 
 

Annnnnd we’re back, with tax withholding, pot-smoking CEOs, IBM Blockchain, and a fat little wombat who just wants to play.

Millions of taxpayers could wind up owing for 2018. Regular “Wake Up” readers may recall previous articles on this topic. The takeaway? Review your current withholding and make any necessary adjustments as soon as possible. [CBS News]

Tesla’s new Chief Accounting Officer David Morton resigns just weeks after joining the company. Things have been weird lately for the electric vehicle maker. Iconoclastic founder and CEO Elon Musk tweeted plans to take Tesla off the public stock market, only to reverse his plan days later. (The SEC is investigating both announcements.) Musk has a documented history of abusing the prescription drug Ambien and appeared on Joe Rogan’s webcast while smoking what appeared to be a joint. So we kind of get why Morton didn’t want to stick around. [New York Times]

“Should I pay my taxes with a credit card?” Depends on your situation and the type of card you use. [ThePointsGuy.com]

IBM to use blockchain to help consumers control the use of their personal data. In an attempt to help stem the current onslaught of data breaches and cyberattacks, the global technology firm has announced that it is providing the IBM Blockchain Platform to “enable consumers to exercise control over the use of their personal data.” IBM was an early adopter of blockchain as a means of creating an infrastructure for processing millions of transactions per second. [Venture Beat]

This week’s videos

Geni Whitehouse talks about "Leading from Within: The Basset Hound versus The Nun" as part of the TEDxNapaValley "Empowering Leadership at Every Level" event. Geni Whitehouse, CPA.CITP, CSPM is the is the author of "How to Make a Boring Subject Interesting : 52 ways even a nerd can be heard".

During a cool morning shower by a brave ranger, this chubby Wombat (26 kilos!!) is in for either an innocent play or a deadly attack! First time we've ever seen a jumping wombat, anyway!

The Wake-Up Call is The REM Cycle’s biweekly compilation of newsworthy articles pertaining to taxation, accounting, and life in general. Got a hot tip? Email us at REMCycle@rem-co.com.

What you need to know about the IRS’s new withholding tables

 
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The Tax Cuts and Jobs Act passed in Congress sparked a major change in the withholding requirements for employers. As if our friends at the IRS didn’t have enough going on, they were tasked with the unenviable project of creating new withholding tables to incorporate the new laws. Even seasoned tax vets are left asking numerous questions regarding the new withholding amounts:

  • How will the new withholding amounts be calculated if there are no longer exemptions?
  • When do these new withholding rates need to be put into effect?
  • Will new W-4s need to be filed for employees?
  • Where can I get additional information on the new tables?
  • Is it time for me to change professions?

Luckily for you, The REM Cycle is on top of it and here to help. Let’s take these issues one by one.

How will the new withholding amounts be calculated if there are no longer exemptions?

The new withholding tables are designed to incorporate all of the changes to the new tax law, not just the suspended exemptions. There are also reduced tax rates, adjusted tax brackets, and an increased standard deduction to account for. To summarize how it works, the new tables use a percentage method based off of your net wages. Your net wages are reduced by your total withholding allowances and then a percentage is withheld accordingly.

When do these new withholding rates need to be put into effect?

This answer depends on when your employer puts these changes into effect. However, the IRS stated that the new rates need to be put into use no later than February 15, 2018.

Will new W-4s need to be filed for employees?

In the past, as a best practice, new W-4 forms should have been filed on a yearly basis for employees. At the very least, employees should have been reviewing their withholding on a yearly basis to make sure no changes were needed. In that regard, not much has changed. The new withholding tables are supposed to incorporate the W-4s that the employees already have on file. As a helpful tool, the IRS will be releasing an improved withholding calculator that can be used to verify any withholding is accurate. Also, the IRS will be revising the W-4 form to fully reflect the new laws and rates. Having your clients check their withholding after these new tools and forms come out is strongly suggested.

Where can I get more information on the new tables?

The IRS released Notice 1036: Early Release Copies of the 2018 Percentage Method Tables for Income Tax Withholding, which details how the new withholding tables work. The Service also provided an FAQ page on irs.gov to help answer commonly asked questions.

Is it time for me to change professions?

I can’t answer that one for you but can tell you this: as long as the tax laws are written and controlled by politicians, we’ll all have jobs. No “postcard” filings – it’s called job security, people!

At the end of the day, the Tax Cuts and Jobs Act created a slew of new tax planning hurdles and opportunities. If you haven’t already, reach out to your trusted advisor to see how the new laws affect you.