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Delap advisors can help you achieve your business goals. Learn How
Delap advisors can help you achieve your business goals. Learn How
The Tax Cuts and Jobs Act (TCJA) passed by Congress in December 2017 triggered many taxpayers to update their withholdings. Often, this resulted in changes to the number of allowances that you claimed. Unless you filed a separate Oregon Only Form W-4 there is a substantial risk that you may be under-withheld at year end. This could mean penalties and interest along with an unexpected tax bill come April. This is because the calculation of income that is taxable in Oregon can be substantially different from your Federal taxable income.
Additionally, individuals that, prior to 2018, relied on a deduction that has been eliminated (i.e. employee business expense) could also end up under-withheld.
The Oregon Department of Revenue (DOR) has developed a comprehensive information source and calculation worksheet. The DOR is urging Oregon individuals to check their withholding to confirm that the proper amount is withheld from each paycheck to cover their 2018 Oregon income tax liability. It is not too late to correct any under-withholding. Once you complete the calculation worksheet compare that to your year-to-date withholding.
If you are under-withheld, you can adjust your Oregon withholding or make estimated payments at any time. Remember, if you adjust your withholding now to make up a 2018 shortage, you can adjust it again in January 2019 to more evenly withhold throughout the year.
If you are over-withheld, you can adjust your Oregon withholding or wait until you file your 2018 tax return to collect your refund.
The DOR is currently developing an online calculator to do most of the work, however, that is not expected to be available until January 2019. Until that time, the withholding calculation worksheet and your personal tax advisor will be your best resources.
As one of Oregon's largest CPA firms, Delap LLP is here to serve your accounting, wealth advisory and managed IT services needs. For more information about the many changes associated with tax reform, contact a Delap advisor or call 503-697-4118 today.