As we enter into the new, and somewhat uncharted, territory of the new tax bill, one logical question for the average taxpayer is whether his or her withholding will be adequate.
Background: Withholding has always been problematic, at best, especially for folks with more than one source of income.
Example: Jane is employed, and makes $74,000/yr after her 401K. Her employer withholds an amount appropriate to Jane as a sole bread-winner with two exemptions. Problem being, she and hubby have investment income, RMDs, and Social Security which push them into a much higher marginal bracket, both state and federal. Now that we're closing in on EOY 2017, are you under-withheld? Might pay to take a look.
Analysis: The IRS takes a dim view of folks who under-withhold or fail to pay estimated taxes as required.
Suggestion: For 2017, run a quick look of what you might owe, compared to what you have paid, either in withholding or estimated taxes. Pay the "delta" in state taxes before December 31. For 2018, all bets are off. The new tables (once promulgated) will no doubt adhere to the fiction of "one source of income". Accordingly, the taxpayer will need to aggregate all sources of income, run the numbers, and either pay quarterly installments or do an end-run with RMD withholding.
It's a mine-field out there. Welcome to the simplified Tax code.
