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Treasury: 90% of wage earners will likely see higher take-home pay

11 января 2018 22:39

Under those new tables, the Treasury estimates that 90% of people who get a paycheck are likely to see more in take-home pay, as soon as February. Employers will have until Feb. 15 to incorporate the changes in their payroll systems.

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.

The new tables are designed not only to best approximate the change in workers' tax liability under the new law, but to do so in a way that "delivers benefits as soon as possible to as many people as possible with as little disruption as possible," a senior Treasury official told reporters.

The IRS is not issuing new Form W-4s ... yet. "We've constructed the tables so that most people should be accurately withheld if they leave their W-4 in place," a senior IRS official noted.

Related: Will enough tax be withheld from your paycheck? Good question

The plan is to have new W-4s by 2019. Since personal exemptions are a core feature of the current withholding system, given that they are now eliminated, "it's necessary to build a new approach to withholding, which will take some time," the senior IRS official said.

In the meantime, he urged filers who have complicated tax situations -- i.e., anyone who is not single, childless and holding down just one job -- to review the number of allowances they take on their W4s once the IRS puts out its new withholding calculator by the end of February.

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.

"We would encourage every taxpayer to run their information through the calculator. Then they can decide what they want to do," the senior IRS official said.

That's not bad advice for any year when there are big tax changes but it's especially critical this year.

Most people fill out their W-4 form when they're hired at a new job and don't change it unless they get married, have kids, get divorced or experience other life-changing situations.

And roughly three-quarters of tax filers are overwithheld, meaning they get a refund when they file their tax returns. The IRS doesn't expect that to change much under the new tax law given the preference filers have shown for getting big refunds, rather than just breaking even or having to cut a new check to Uncle Sam when they file their federal tax return.

-- CNNMoney's Donna Borak contributed to this report

Source: CNN
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