By Nicholas J. Crocetti, CPA

When the Tax Cuts and Jobs Act was passed in 2017, many clients asked, “How much tax will I owe?” As is the case with most personal tax issues, the response to that question is, “It depends.”

The accompanying chart (see below) demonstrates basic variables that affect your federal tax bill. In Pennsylvania, the median household income in 2016 was nearly $56,000. Using this number, you can see that the tax due could range from $5,620 taxes owed to a credit of $541 – more than a $6,000 swing. The table only considers if you are single, married, or have dependents. Other factors that could impact your tax bill include your age, occupation, retirement and health savings, and employment status. Seniors 65 or older are entitled to higher deductions. Teachers have an additional deduction that could affect the computation. Making retirement contributions to 401(k) and individual retirement accounts could reduce your taxable income, as would contributions to health savings accounts (HSAs). The self-employed have self-employment taxes to factor into their computation, and there are new deductions for businesses that also need to be considered. And all this doesn’t take into account state income tax considerations or local municipality earned income taxes.

The IRS withholding calculator is one tool that can help you compute your personal federal tax withholding – which, in a best-case scenario, should equal your tax liability. This provides some guidance on adjusting the taxes withheld from your paycheck to be sure that you are not surprised with a big tax bill in the spring of 2019. The withholding calculator will ask you to estimate your income, provide the number of children you will claim, and other items affecting your 2018 taxes. For a more personalized answer to the question "How much tax will I owe?" you should consult a CPA to be sure you have a clear picture of your tax situation and to help with planning options to navigate the new tax law. If you aren’t sure where to find a CPA, Pennsylvania residents can use PICPA’s CPA Locator.

Nicholas J. Crocetti, CPA, is managing director at CBIZ MHM LLC in Plymouth Meeting, Pa. He is a frequent speaker at PICPA tax conferences and a member of AICPA council.