The Internal Revenue Service issued new 2014 income tax withholding schedules and they are fully integrated with our online tax calculator now. We are fielding a lot of inquiries about new paycheck amounts and will try to address the common questions here:
Q. Why did my nanny's paycheck go up a bit? I don't remember any tax cuts.
A. Tax tables are adjusted annually with a formula that accounts for inflation. The amount of the standard deduction increased, meaning the wage subject to income tax decreased at bit. Most people will not note a change of more than a dollar a week unless there has been a change to marital status or number of exemptions.
Q. Are there any changes I should note when calculating my household employee's paycheck?
A. It is a best practice to have your employee complete a new form W-4 on an annual basis. This is your employee's instruction to you on how to calculate his/her withholding. For employees who have a valid same-sex marriage, no matter where they live, they must now claim the filing status of Married. We discussed this in an earlier post in detail when the IRS announced changes after the courts invalidated the Defense of Marriage Act (DOMA).
Q. My paycheck today covers the last week of December. How do I calculate the taxes?
A. Income is taxed according to the rule of constructive receipt. The period covered doesn't matter, it is the date of the paycheck. If your paycheck is dated January 3, 2014 it is taxed at 2014 tax rates and will be reported on your 2014 income taxes.
Q. I need my Form W-2 so I can file for my income tax refund. It is January 4, when will I have it?
A. We are busily doing annual reconciliations on employer accounts. We expect to complete pushing W-2 forms out to the online platforms no later than January 15. If your employer pays you directly and uses HWS simply for tax work, we are depended on when the employer tells us the details of your quarterly wages. W-2 forms are available within 7 days of a completed report of quarterly wages paid.
Employees whose employers subscribe to our premium service have 24/7 online account access - however online accounts require that you be pre-enrolled. The employee self-service enrollment completes the next business day!
Q. I am worried I am going to owe money with my taxes (or my refund is too big and I need more money in my paycheck). What do I do?
A. Workers should review their withholding every year and if necessary, fill out a new Form W-4 and submit it to their employer.