BOISE — We're just three weeks shy of the start of tax season and recent tax code changes could leave many Idahoans with a big tax bill.
The federal tax code changed in December of 2017, which also changed the calculation for income taxes withheld from paychecks. The problem is, many Idahoans are still unaware of the change and haven't updated those withholding's on their W-4.
"I am ordering the Tax Commission to do all they can to better inform taxpayers of what they need to do to avoid a surprise income tax bill," said Governor Brad Little in his State of the State address. And today the Idaho State Tax Commission launched the first Idaho-specific W-4 form to aid taxpayers in their calculations.
"The problems it's creating is that people are under-withheld. Under-withheld means that they, may used to have gotten a refund, now they may owe tax instead," said Cynthia Adrian, a Tax Policy Specialist at the Idaho State Tax Commission.
All of that is due to a failure to update payroll withholding's on the W-4, which was part of the Tax Cuts and Jobs Act of 2017.
"It changed the amount of the standard deduction, it almost doubled. It also changed the personal independent exemptions. Those went away," said Adrian.
Now, the Idaho State Tax Commission is making it easier on taxpayers by providing two separate forms, a federal and a state. While the federal W-4 is still needed for calculating the federal withholding, the commission says the Idaho W-4 is shorter, simpler, and a more accurate way of calculating your Idaho withholding. But ultimately, if you do find yourself with a surprise bill, Adrian says you can begin making pre-payments toward that bill now, or you can set up a payment plan through the tax commission.