Economy

New tax withholding tables available for employers

New tax withholding tables available for employers”

Millions of Americans will need to use a new Internal Revenue Service online calculator to ensure their new paychecks are accurate, Trump administration officials said Thursday as they issued guidelines for implementing the recently passed tax law.

The major changes affecting individuals include new tax brackets, (mostly) lower income tax rates, a near-doubling of the standard deduction and the elimination of both personal exemptions as well as many itemized deductions. Workers will see changes in their February paychecks once employers adopt the new guidance, the news release said. And that results in a refund when they file their tax returns. It expects to have the latest and greatest calculator available by the end of February.

"This will provide (Americans) with certainty so they are neither over-withheld or under-withheld", Treasury Secretary Steven Mnuchin said Thursday.

Reduced tax rates don't necessarily mean a lower tax bill for 2018. The new withholding tables are created to work with the W-4 forms that workers have already filed with their employers to claim withholding allowances, so employees do not have to make any changes at this time.

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

More news: Sturm, Ruger & Company, Inc. (RGR), Covanta Holding Corporation (CVA)

Currently, the IRS is revising that tool to reflect the most recent tax law changes. The IRS notes that the tables are created to produce the correct amount of tax withholding for those with more straightforward situations. Ron Wyden, D-Ore., said in a statement. There are also new limits on the mortgage interest deduction, and the child tax credit was expanded.

The Treasury Department reports that approximately 90 percent of workers will instantly see larger paychecks once employers put the tax tables into practice, CNN Money reported.

"Such a calculator will ask for anonymous inputs - for example, your income, number of dependents and other pieces of information that help determine whether you might be eligible for various tax breaks", CNN Money noted.

The new guidelines adjust how much income tax must be taken out from employee paychecks after taking into account exemptions claimed by employees on their IRS Form W-4, filed with their employers to help determine withholding.

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



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