One of those changes was the withholding tables, which determine what tax rate applies to what level of income. Nine out of 10 taxpayers "will see a boost in their take-home pay within the coming weeks", he said. The tables are also aimed at avoiding over- and under-withholding of tax as much as possible.
The IRS needs money for programming and system updates, answering phone calls, drafting and publishing new tax forms, revising regulations and guidance, training employees and developing ways to verify compliance and spot potential fraud, Olson said. The White House said Thursday that 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.
Wage earners with "simple tax situations", the senior IRS official said, should be able to correctly calculate their withholdings without any over or under payments.
The Trump administration on Thursday said most USA workers will see bigger paychecks in February, as a result of the Republican tax overhaul, but many will need to make sure taxes are withheld accurately with an online calculator that does not yet exist. The IRS doesn't expect that to change much under the new tax law given the preference filers have shown for getting big refunds, rather than just breaking even or having to cut a new check to Uncle Sam when they file their returns. Specifically, the withholding tables released today are created to work with the Forms W-4 that workers have already filed with their employers.
"Any claims that we are doing this for political issues are ridiculous", Mnuchin said. "Then they can decide what they want to do", the senior IRS official said.
Democrats are concerned the rushed withholding tables could leave many tax filers in a situation of potentially being underwithheld for tax year 2018 and therefore left owing money when they file their tax returns in early 2019. And that results in a refund when they file their tax returns. Two Democratic lawyers asked the watchdog Government Accountability Office to review the guidelines.
"Republicans are using brute force and speed to implement a law that will deliver a financial blow to hardworking Americans all across the country", Sen.
The new guidance will allow many taxpayers to start seeing bigger paychecks due to the new law. Ron Wyden, D-Ore., said in a statement.
"The Administration's monumental tax reform legislation continues to provide economic benefits for hard-working Americans".
The new system ushered in by the tax reform law will be ready for 2019, but the immediate guidelines are created to allow wage earners to get immediate benefits this year without snags. The process will include seeking input from employers and payroll providers on how best to design a new W-4 to reflect an updated tax system based on the new law.