- The Washington Times - Thursday, January 11, 2018

The Treasury Department on Thursday released new guidelines on how much money companies should withhold from paychecks, saying the vast majority of workers will see more money rolling in as early as next month.

About 90 percent of U.S. workers ultimately will see bigger paychecks thanks to the new tax-cut law, which necessitated the changes, and many of those gains will start in February, said Treasury Secretary Steven Mnuchin.

“These tax cuts will ensure that American workers are able to keep more of their hard earned income and decide how to spend, invest or save it,” Mr. Mnuchin said.

The IRS also will release a new online calculator by the end of February so that the public can figure out how much money they should be paying.

“This will help provide individuals with certainty, so that they are neither over-withheld or under-withheld and can plan their financial decisions,” Mr. Mnuchin said.

Mr. Mnuchin also said there should be “no material change” in the percentage of taxpayers who will get refunds under the new formula. About three-quarters of taxpayers got a refund last year.

Congressional Democrats had warned that the Trump administration could use the new rules intentionally to withhold too little and increase take-home pay for the public this year, only to claw that money back during next year’s tax filing season.

Sen. Ron Wyden of Oregon, the ranking Democrat on the Senate Finance Committee, said he looks forward to an independent audit of the tax tables, “which will expose whether the Trump administration is tampering with Americans’ paychecks, resulting in a whopping tax bill 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,” Mr. Wyden said.

But Mr. Mnuchin said charges that the administration is juicing the numbers are “ridiculous.”

“We have people who have worked very carefully on this. Our objective is not to have taxpayers over-withheld so they owe money at the end of the year,” he said.

Congressional Republicans also hailed the 90 percent projection, saying the news is more evidence that the tax-cut plan already is delivering tangible benefits to the American people.

“This is just one of many ways the Tax Cuts and Jobs Act will improve lives in our nation — and it’s only the beginning,” said House Ways and Means Committee Chairman Kevin Brady, Texas Republican. “As each new part of the law takes effect, families will see more of the benefits.”

The withholding tables rely on a complicated formula, but they reflect the new individual tax rates of 10, 12, 22, 24, 32, 35 and 37 percent, compared to last year’s brackets of 10, 15, 25, 28, 33, 35 and 39.6 percent, which translates to most people seeing a bump in take-home pay.

Though every situation will be different, House Majority Leader Kevin McCarthy estimated that an average family of four will see $140 more in their paycheck each month under the new system.

“The good news keeps rolling in for the American people,” said Mr. McCarthy, California Republican.

The IRS said employers should start to use the new tables as soon as possible, and no later than Feb. 15.

The agency said that while employees don’t have to do anything differently right now, the IRS is working on revising the W-4 form, which employees have to fill out to determine how much tax they owe.

That means employers will be using the new tables based on old forms from employees in many cases.

Mr. Mnuchin said that for now, people soon will be able to double-check their finances with the online calculator, which will reflect other changes in the tax law, like an increased standard deduction.

“We’re going to work on a super-user-friendly form that fits the new tax system. We’re going to try to do that,” he said. “I want to make sure we get a lot of feedback as we design that and update this.”

He said Treasury and the IRS will work together to release a new W-4 form for 2019 later in the year.

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