Make Sure Your Paycheck is Reflecting the Correct Withholdings
With recent changes in tax laws at both the federal and state levels, it is important that Idaho citizens understand how to calculate how much they will owe in state income taxes. This is especially important if your paycheck is not reflecting the correct amount of withholdings, because you will have to be prepared to pay a tax bill when you file your 2018 income tax return.
At Stevens Pierce & Associates in Twin Falls, ID, we are here to help our clients ensure their paychecks reflect the correct withholdings and to help them understand the new federal and state tax rules and regulations. Our experienced accountants understand that taxes can be tricky, but with us, you don’t have to do it alone!
How to Figure Out How Much You Owe
According to the Idaho State Tax Commision, the first step is to calculate your total income, and from that amount, subtract your standard deduction, whether you filed as single, head of household, or married. This is your taxable income. You can then check the 2018 individual income tax tables and use your taxable income to determine how much you will owe in taxes.
What is Different This Year from Last Year?
Idaho has decided to conform its tax law changes to those implemented by Congress in the Tax Cuts and Jobs Act (TCJA). According to the Idaho State Tax Commission, changes in the tax law include:
- Standard deductions have increased:
- Single = $12,000
- Head of Household = $18,000
- Married & Filing Jointly = $24,000
- Personal exemptions have been eliminated
- Dependent exemptions have been eliminated
- Many itemized deductions have been eliminated or capped
- Idaho has implemented a nonrefundable child tax credit of $205 for every qualifying child
- The individual income tax rate in Idaho has been reduced to 0.475%
The New Child Tax Credit
Not everyone will benefit from the new state tax laws. Unfortunately, many low- to middle-class families will be paying higher taxes because of the new child tax credit. That’s because Idaho did not utilize a child tax credit at all until after the federal TCJA passed. Originally, Idaho implemented a $130 nonrefundable tax credit for all qualifying children, but they increased it to $205. However, even this increased tax credit is not enough to make up for the personal exemptions that families used to be able to take advantage of but no longer can. In fact, the Idaho Legislative Services Office says the child tax credit would have to be at least $287 in order to make up for lost personal exemptions.
For more information about the Idaho child tax credit, click here.
If you have questions about how much should be withheld from your paycheck, or about any of the new state tax laws, please contact us today at 208-734-8662 and we will be happy to help you navigate the changing regulations. We look forward to working with you!