How much tax to withhold? New calculator to help figure it - WFMJ.com News weather sports for Youngstown-Warren Ohio

How much tax to withhold? New calculator to help figure it

Posted: Updated:

By MARCY GORDON
AP Business Writer

WASHINGTON (AP) - Millions of Americans are now getting bigger paychecks as a result of the new tax law. So the government is issuing an online calculator for figuring whether enough money is being set aside.

The calculator unveiled Wednesday by the Treasury Department and the Internal Revenue Service helps people determine whether they have the correct amount of money withheld by employers from paychecks - to avoid facing a huge tax bill for 2018. The calculator asks taxpayers to estimate their 2018 income and other items that affect their taxes, such as filing status and number of dependents.

The changes reflect the massive Republican tax plan signed into law in December.

Experts advise checking the calculator to ensure people have the correct number of withholdings and updating W-4 forms filed with employers. At the same time, experts say, the new calculator doesn't provide a fool-proof reckoning; it helps people estimate their tax obligation to determine the amount that should be withheld.

The heftier paychecks for many showing up in recent weeks resulted from employers withholding less money in anticipation of lower income taxes under the law.

The calculator was the government's latest burst of information related to the sweeping $1.5 trillion tax overhaul, the first major rewrite of the tax code in three decades, which took effect Jan. 1. 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.

The calculator is designed to add precision to the income-tax withholding tables issued last month to guide how much employers should set aside as taxes from workers' pay. The tables reflected only some of the changes under the new tax law.

With businesses across the country under a mandate to adopt the payroll withholding changes by Feb. 15, employees started seeing the changes reflected in their paychecks this month.

According to the nonpartisan Tax Policy Center, a middle-income household would on average get a tax cut of $930 this year, lifting its after-tax income by about 1.6 percent. That increase won't be perfectly reflected in paychecks, though, because lower tax withholding on pay is just a piece of a complicated set of changes from the new tax law. What your employer withholds is based on an estimate of your tax obligation that includes many complex factors, but it's not a perfect measure.

As a result, taxpayers may find they are unintentionally over- or underwithholding for their taxes if they don't do some legwork.

"Employees should also use the calculator every year in order to ensure they continue to have the appropriate withholding," Treasury Secretary Steven Mnuchin said in a statement. "This 'paycheck checkup' is more important than ever and will allow employees to see the tax cuts properly reflected in their withholding."

__

AP Personal Finance Writer Sarah Skidmore Sell contributed to this report.

__

Calculator is available on IRS website, https://apps.irs.gov/app/withholdingcalculator/

Copyright 2018 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

  • More From wfmj.comHot ClicksMore>>

  • Too hot to handle: Politics of warming part of culture wars

    Too hot to handle: Politics of warming part of culture wars

    Friday, June 22 2018 3:25 AM EDT2018-06-22 07:25:16 GMT
    (AP Photo/Eric Jamison, File). FILE - In this Aug. 10, 2009, file photo, former-Sen. Tim Wirth moderates the National Clean Energy Summit 2.0, in Las Vegas. Three decades after early warnings about global warming, the issue has become entrenched in the...(AP Photo/Eric Jamison, File). FILE - In this Aug. 10, 2009, file photo, former-Sen. Tim Wirth moderates the National Clean Energy Summit 2.0, in Las Vegas. Three decades after early warnings about global warming, the issue has become entrenched in the...
    Three decades after early warnings about global warming, the issue has become entrenched in the nation's culture wars.More >>
    Three decades after early warnings about global warming, the issue has become entrenched in the nation's culture wars.More >>
  • Koko the gorilla used smarts, empathy to help change views

    Koko the gorilla used smarts, empathy to help change views

    Friday, June 22 2018 3:18 AM EDT2018-06-22 07:18:29 GMT
    Koko, the gorilla who mastered sign language, has died in her sleep at the foundation's preserve in California's Sana Cruz mountains on Tuesday.More >>
    Koko, the gorilla who mastered sign language, has died in her sleep at the foundation's preserve in California's Sana Cruz mountains on Tuesday.More >>
  • Science Says: What makes something truly addictive

    Science Says: What makes something truly addictive

    Friday, June 22 2018 3:18 AM EDT2018-06-22 07:18:00 GMT
    (AP Photo/Ahn Young-joon). FILE - In this Wednesday, Dec. 11, 2013 file photo, a college student plays a computer game at an Internet cafe in Seoul, South Korea. On Monday, 18, 2018, the World Health Organization said that compulsively playing video ga...(AP Photo/Ahn Young-joon). FILE - In this Wednesday, Dec. 11, 2013 file photo, a college student plays a computer game at an Internet cafe in Seoul, South Korea. On Monday, 18, 2018, the World Health Organization said that compulsively playing video ga...
    Video game "addiction" decision renews debate over whether behaviors can cause same kind of illness as drugs.More >>
    Video game "addiction" decision renews debate over whether behaviors can cause same kind of illness as drugs.More >>
  • More NewsMore>>

  • Protesters take to streets after police shooting in Pittsburgh

    Protesters take to streets after police shooting in Pittsburgh

    Thursday, June 21 2018 11:41 PM EDT2018-06-22 03:41:25 GMT
    EAST PITTSBURGH, Pa. (AP) - The Latest on the fatal police shooting of a 17-year-old. For the second night, hundreds of people in Pennsylvania have taken to the streets to protest the fatal police shooting of a 17-year-old boy. Protesters demonstrated outside the East Pittsburgh police headquarters Thursday night and then began marching through the streets, eventually shutting down a major interstate. Antwon Rose Jr. was shot by an East Pittsburgh officer Tuesday just seconds after...More >>
    EAST PITTSBURGH, Pa. (AP) - The Latest on the fatal police shooting of a 17-year-old. For the second night, hundreds of people in Pennsylvania have taken to the streets to protest the fatal police shooting of a 17-year-old boy. Protesters demonstrated outside the East Pittsburgh police headquarters Thursday night and then began marching through the streets, eventually shutting down a major interstate. Antwon Rose Jr. was shot by an East Pittsburgh officer Tuesday just seconds after...More >>
  • Youngstown Fire Station 15 NOT closed as planned

    Youngstown Fire Station 15 NOT closed as planned

    Thursday, June 21 2018 10:26 PM EDT2018-06-22 02:26:46 GMT

     Fire station number 15 in Youngstown did NOT close as planned today.  

    More >>

     Fire station number 15 in Youngstown did NOT close as planned today.  

    More >>
  • Two arrested, officer covered in cement after Austintown police chase

    Two arrested, officer covered in cement after Austintown police chase

    Thursday, June 21 2018 10:25 PM EDT2018-06-22 02:25:02 GMT

    Two suspects were arrested in Austintown on Tuesday after leading police on a chase. 

    More >>

    Two suspects were arrested in Austintown on Tuesday after leading police on a chase. 

    More >>
Powered by Frankly
All content © Copyright 2000 - 2018 WFMJ. All Rights Reserved. For more information on this site, please read our Privacy Policy and Terms