New IRS Tax Calculator, Form W-4 To Check Your Withholding

American workers began to see a change in their paychecks around mid-February, owing to the sweeping tax legislation passed by Republicans in December. Though the bill became law when the new year started, employees didn't immediately see a change in their paychecks because the bill was rushed through Congress and the IRS advised workers to check their withholding amounts once the changes went into effect.

The Treasury Department sent information to employers explaining how much money should be withheld from employee paychecks but still advised workers to double check their withholding amounts. The IRS said in January that employees should use a new IRS online calculator to check these amounts but that calculator wasn't immediately available.

On Wednesday, the IRS unveiled the new withholding calculator that workers can use to determine whether they are paying the right amount of taxes and avoid potentially underpaying or overpaying. The IRS also unveiled a new version of the W-4 form to help taxpayers check their 2018 withholding.

“Following the major changes in the tax law, the IRS encourages employees to check their paychecks to help ensure they’re having the right amount of tax withheld for their personal situation,” Acting IRS Commissioner David Kautter, said in a statement.

The IRS explains that if changes should be made to withholding, the calculator gives employees the information they need to fill out the new W-4, which can be submitted to employers.

“Withholding issues can be complicated, and the calculator is designed to help employees make changes based on their personal financial situation,” Kautter said. “Taking a few minutes can help taxpayers ensure they don’t have too little – or too much – withheld from their paycheck.”

Withholding changes do not affect 2017 tax returns that are due in April.

>>>Click here to access the new withholding calculator and the new W-4.

According to The New York Times, about 75 percent of Americans can expect a tax cut in 2018 from the tax bill. However, at the end of a decade, many families will experience a tax hike under the tax bill, according to analysts. Read more about the details of the tax bill.

The fundamentals of the tax bill include:

• Corporations get a massive permanent tax cut from 35 percent down to 21 percent.
• The top income tax rate is dropped from 39.6 percent to 37 percent, giving a large tax cut to wealthy people.
• Many individuals and families will see their tax rates fall at first, but these cuts expire before the 10-year horizon of the bill expire.
• The child tax credit is increased, giving many families an additional cut; this provision expires in 2026.
• Several larger personal deductions are cut, which will likely cause some families and individuals to pay higher rates overall, even in the short term.
• The Affordable Care Act insurance mandate is repealed, a move which the Congressional Budget Office thinks will raise premiums and cause millions more people to be uninsured in the coming years.

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