Millions will need to use IRS tool to make sure paychecks are accurate
The Washington Post
Millions of Americans will need to use a new Internal Revenue Service tool to ensure their new paychecks are accurate, Trump administration officials said Thursday as they issued guidelines for implementing the recently passed tax law.
The guidelines are necessary for businesses to calculate how much to withhold in taxes from employees’ paychecks beginning as soon as next month. The White House said Thursday businesses should make these adjustments by Feb. 15, part of the administration’s push for millions of workers to see bigger paychecks as quickly as possible.
In rushing the process, the Treasury Department is asking companies to rely on outdated forms to help determine how much to withhold.
A senior IRS official said Thursday that Americans with simple tax situations would likely get accurate paychecks next month. But many Americans, including those who tend to itemize their tax returns, would need to use the online tool to ensure they aren’t dramatically overpaying or underpaying their taxes.
If they find their paychecks are inaccurate, it will be incumbent on the employees to tell their employers to make corrections.
The patchwork system is part of a rushed transition the White House is trying to push through to allow as many Americans as possible to see bigger paychecks next month.
The new guidelines incorporate lower tax rates that were central to Congress’ December tax overhaul. Trump administration officials said the new guidelines should lead to bigger paychecks for 90 percent of all wage earners.
But the tax withholding decisions are based on tax forms Americans file with their employers, known as W-4s, that were written to apply to an outdated tax system. The Treasury Department and IRS are designing new W-4 forms that millions of Americans will likely fill out later this year to make their tax withholdings more accurate in the future, but they won’t be ready in time for the paycheck adjustments next month.