Treasury calculator verifies taxes withheld

Elias Hubbard
March 2, 2018

The Internal Revenue Service (IRS) and the Treasury Department on Wednesday unveiled a tax calculator created after passage of the Tax Cuts and Jobs Act.

Knowing how much money to set aside can be the difference between owing the IRS and getting a refund.

It's created to help guide workers on how much they should have deducted from their paychecks under the new tax law.

But you will need to indicate your marital status, the number of jobs you hold, your gross income and whether your children qualify you to take two child tax breaks, plus other details.

"The tool will help taxpayers determine whether they should update their W-4s", Treasury Secretary Steven Mnuchin said during a press conference, referring to the form that employees use to determine the amount withheld.

The online calculator allows taxpayers to compare how much their employer is withholding for taxes on their pay stub to a government projection of how much should be withheld.

The full effects of the tax law for 2018 won't be felt by Americans until the April 2019 filing season. Plus it goes into whether you receive income from other sources and how much you have had withheld already.

"The old way to fill out a W-4 was, you would put a "1" for yourself, another "1" if you're married and you would put the number of children that you have that are dependents", Walser tells CNBC Make It. However, having a completed 2017 tax return can help taxpayers work with the Withholding Calculator to determine their proper withholding for 2018 and avoid issues when they file next year.

People with more complicated financial situations might need to revise their W-4.

While the new law lowered most income tax rates, it made a lot of other tax changes too.

While most employees should have received a bump in their net compensation by now, some paychecks could be artificially high because of problems with documentation. The IRS does not save or record the information you enter on the Calculator. The app also links to the new W-4 form.

This spring and throughout the year, the IRS will be working closely with businesses as well as the tax and payroll communities to help educate the public about the new withholding guidelines and the Withholding Calculator.

Other reports by Click Lancashire

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