New tax law won't affect 2017 filing season

New tax law won't affect 2017 filing season

This is the first in a series of steps that IRS will take to help improve the accuracy of withholding following major changes made by the new tax law.

But for many taxpayers, they will need to assess whether the new tables really are withholding enough money so that they're not saddled with a big bill when they file their taxes next year. They should continue to use the 2017 withholding tables until implementing the 2018 withholding tables. That means employees could start seeing the changes reflected in their paychecks next month, the IRS said.

Based on the new tables, some employees could be in danger of tax underwithholding if they claim a significant number of withholding allowances, O'Toole told Bloomberg Tax. This will minimize burden on taxpayers and employers.

"The IRS appreciates the help from the payroll community working with us on these important changes", said Acting IRS Commissioner David Kautter.

To ensure an accurate calculation, taxpayers will have to enter their personal financial information into a calculator expected to be unveiled next month on the website IRS.gov.

Treasury Secretary Steven Mnuchin at the White House press briefing on Thursday dismissed suspicions that administration is "juicing" the tables as a "ridiculous charge".

More news: Tesco shares fall on weaker than expected Christmas sales growth

For people with simpler tax situations, the new tables are created to produce the correct amount of tax withholding. The new law provides steep tax cuts for corporations and wealthy Americans while offering more modest reductions for most low- and middle-income families and individuals.

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 now take on their W4s once the IRS puts out its new withholding calculator by the end of February. It expects to have the latest and greatest calculator available by the end of February.

The IRS is also working on revising the Form W-4.

"I look forward to GAO's independent review of these tables, which will expose whether the Trump administration is tampering with Americans' paychecks, resulting in a whopping tax bill next year", Wyden said.

But the taxing service did note that the new tax rates will require a new approach to the W-4 forms and that it should have the new forms by 2019.

The new withholding tables take into account a variety of changes brought about by the passage of the GOP's revamped tax code. Treasury would achieve that, the lawmakers surmised in the letter, by pushing the IRS to change its formula for withholdings.

Related Articles