The Treasury Department on Thursday released the withholding tables for the new tax law.
Mnuchin spoke shortly after Treasury and the IRS issued an update to the IRS formula that employers use to estimate employees' tax bills. Find out how much you should be paying to attract and retain the best applicants and employees, with customized information for your industry, location, and job.
Employers are likely to start changing the tax withholdings by mid-February, which means workers will see the change in their paychecks within weeks. In the meantime, employers and payroll service providers should continue to use the existing 2017 withholding tables and systems.
The withholding tables and guidance it puts out will be created to work with existing W-4s that employees have already filed, the agency said.
She notes that there has already been considerable public confusion about withholding changes, the deductibility of prepaid property taxes, and whether states may let taxpayers make charitable contributions in lieu of taxes to claim larger deductions than otherwise would be allowed now that there is a new $10,000 cap on the state and local tax deduction.
According to the IRS, it generally takes companies about a month to integrate new withholding guidelines.
Amid the frantic push by Republicans to pass a tax overhaul by Christmas, it's easy to forget that you still have to contend with your 2017 taxes, which are governed by the old rules. Taxpayers are encouraged to use the calculator to adjust their withholding once it is released.
The chairman has the ability to direct the oversight efforts to areas of particular importance, and prior chairmen attempted to help address longstanding IRS concerns such as outdated computer systems as well as more recent challenges such hackers gaining access to individual refunds. "Payroll withholding can be complicated, and the needs of taxpayers vary based on their personal financial situation".
For example, "the tables aren't created to account for married couples with two incomes, or side jobs with no withholdings", said Kathy Pickering, executive director of The Tax Institute at H&R Block. The Purple Book also recommends ways to strengthen taxpayer rights and the tax-filing process, improve IRS assessment and collection procedures, reform the tax code's penalty and interest provisions, strengthen taxpayer rights before the Office of Appeals, enhance confidentiality and disclosure protections, and strengthen the independence of the Office of the Taxpayer Advocate.
For 2019, the IRS anticipates making further changes involving withholding. Form W-4 and the revised calculator will reflect additional changes in the new law, such as changes in available itemized deductions, increases in the child tax credit, the new dependent credit and repeal of dependent exemptions.
Most workers won't have to submit any tax forms to see a change in their withholding.