New Trump administration tax guidelines rely on workers to double-check their paychecks

Treasury 90% of wage earners will likely see higher take-home pay

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Senior federal officials estimate that 90 percent of wage earners across the country will see an increase in take-home pay.

The major changes affecting individuals include new tax brackets, (mostly) lower income tax rates, a near-doubling of the standard deduction and the elimination of both personal exemptions as well as many itemized deductions.

The new guidance, developed jointly by Treasury's Office of Tax Policy and the IRS, was constructed to work within the constraints of the existing payroll withholding system in order to deliver the benefits of the tax cuts as soon as possible, to as many Americans as possible, and with as little disruption as possible. Employers will have until February 15 to incorporate the changes in their payroll systems.

Mr. Mnuchin pushed back on those concerns Thursday, saying the IRS usually issues its withholding tables every January, and the agency chose to wait until February to take into account the changes under the new tax system.

The IRS is going to need some $500 million over the next two years to implement the recently-passed $1.5 trillion tax-cut bill, according to an agency report released Wednesday.

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.

One expert said the New Jersey and California plans have a fatal flaw.

The current tax withholding system is based on personal exemptions, which, under the new bill, was repealed. "Then they can decide what they want to do", the senior IRS official said. When they file their tax returns, if their tax payments were too high or too low, they must account for the difference through a refund or payment.

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

Senator Ron Wyden of OR and Representative Richard E. Neal of MA, the top Democrats on the Senate and House tax writing committees, sent a letter to the Government Accountability Office asking it to analyze the 2018 withholding tables and determine whether they will result in "systematic under-withholding". With these new guidelines, companies can start adjusting employee paychecks.

Senior IRS and Treasury Department officials told reporters Thursday that they would be encouraging all Americans to proactively use a new IRS tax calculator in late February to help them determine if their paychecks are accurate. Ron Wyden, the top Democrat on the Senate Finance Committee, said in a statement.

And roughly three-quarters of tax filers are overwithheld because they take too few allowances.

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