IRS Unveils New Income Tax Withholding Guidelines

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The Internal Revenue Service will need to hire "a significant number of people" to implement the new GOP tax law.

Businesses across the country must adopt the changes by February 15.

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.

Congressional Democrats are concerned that in making those changes, the IRS may have caved to pressure from the administration to deliver immediate tax savings to workers' paychecks while exposing taxpayers to higher tax bills in 2019. "Taxpayers can not make these changes until the revised Form W-4 is published, which the IRS has announced will be forthcoming in the coming months".

Administration officials insisted that the guidelines would withhold the correct amount of tax from wages but acknowledged that they are geared to out-of-date W-4 individual withholding forms.

In the letter, Wyden and Neal said that withholding too little in taxes presents "a considerable problem and undue hardship".

Acting IRS commissioner David Kautter said more information will be provided to Americans to help better understand the changes.

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

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The agency said it is revising the Form W-4 and the online employee withholding calculator to reflect the new tax law, including changes in available itemized deductions, increases in the child tax credit, the new dependent credit, and the repeal of dependent exemptions.

The calculator and new Form W-4 can be used by employees who wish to update their withholding in response to the new law or changes in their personal circumstances in 2018, and by workers starting a new job.

Too good to be true?

The top Democrats on the House Ways and Means and the Senate Finance committees have raised concerns about whether the new tables could lead to systematic underwithholding.

"We think there will be over $1 trillion in growth, so I do think this will pay for itself", Mnuchin said at an event hosted by the Economic Club of Washington, dismissing estimates from the Joint Committee on Taxation that the tax cuts will increase USA deficits by $1.1 trillion to $1.5 trillion over 10 years.

The GAO has said Wyden's request must go through its usual review process before a decision to proceed is made.

The Treasury released its on Thursday, reflecting changes stemming from the.