Democrats ask watchdog to review new IRS tax guidelines

Democrats ask watchdog to review new IRS tax guidelines

The move should translate into more take-home pay for about 90 percent of American workers, Treasury Secretary Steven Mnuchin said in a statement.

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 Internal Revenue Service released information today to help taxpayers understand the new income-tax withholdings and changes made by the tax reform legislation enacted last month. Employers and payroll companies will now be required to process and implement those changes.

In the meantime, on Thursday, a senior IRS official speaking on background during a phone call press conference explained that the new withholding table is the first installment in a three-step process created to ensure wage earners have the correct amount of taxes withheld, preventing under or over paying.

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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. In 2019, employees will need to file new W-4 documents.

One expert said the New Jersey and California plans have a fatal flaw. Personal exemptions are a core feature of the current withholding system, but now that they are eliminated, "it's necessary to build a new approach to withholding, which will take some time", the senior IRS official said. A senior IRS official said he expected that level to fall just a bit next year to around 73 percent.

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. That means employees could start seeing the changes reflected in their paychecks next month, the IRS said.

But Democrats have alleged the number could fall much more, accusing the White House of changing the tax tables in a way that will have Americans dramatically underwithhold their tax payments during the year only to be hit with big tax bills next year. If they determine they are paying too much or too little in taxes, based on the size of their family or other variables, they can direct their employer to make changes. Ron Wyden (D-Ore.) and Rep. Richard Neal (D-Mass.). The White House said Thursday businesses should make these adjustments by February 15, part of the administration's push for millions of workers to see bigger paychecks as quickly as possible.