News Worms
News Worms


Republicans predict paychecks will grow as IRS issues new tax withholding guidelines

Republicans predict paychecks will grow as IRS issues new tax withholding guidelines

Mr. Mnuchin added that about 76% of taxpayers typically see withholding amounts that result in refunds at the end of the year, and he doesn't expect that percentage to change under the new tables.

That's when new withholding guidelines under the tax cut provisions of the new tax law - the Tax Cuts and Jobs Act - go into effect.

In a letter to U.S. Comptroller General Gene Dodaro, Democratic Senator Ron Wyden and Representative Richard Neal said they were concerned that the U.S. Treasury could be pressured to adopt tax withholding tables that take too little federal tax out of employee paychecks to make good on White House predictions of a middle-class windfall.

Employers should begin using the new withholding tables as soon as possible, but not later than February 15, according to the IRS notice issued Thursday.

The new guidance will allow many taxpayers to start seeing bigger paychecks due to the new law. Underwithholding would lead to taxpayers owing more when they file their 2018 returns next year.

"Republicans are using brute force and speed to implement a law that will deliver a financial blow to hardworking Americans all across the country", Sen. "It's taxes simply being called by another name", he said.

Republicans have promised that American wage earners will see bumps in their paychecks starting in February - after employers have made the withholding adjustments.

The Internal Revenue Service (IRS) and U.S. Treasury Department released new withholding guidance on Thursday, indicating that employees should see the tax reform changes reflected in their paychecks by next month. There are significant limitations on long-cherished deductions, such as the federal deduction for state income, property and sales taxes. The online calculator will not be available until sometime next month. California, New York and New Jersey are among the states that have been considering changes to their tax codes to blunt the pain that their residents could feel from the scaling back of the state and local tax deduction in the new law. Employers will have until February 15 to incorporate the changes in their payroll systems.

And roughly three-quarters of tax filers are overwithheld because they take too few allowances.

The lower rates, an expanded standard deduction, and a larger Child Tax Credit are projected to reduce taxes for American workers and business owners by $180 billion in 2018, according to the Joint Committee on Taxation.

The current tax withholding system is based on personal exemptions, which, under the new bill, was repealed.

These tax changes are all scheduled to expire after 2025, though Republicans have said they want to make them permanent.

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