Posts
There's no shortage of Republican optimism and Democratic pessimism about what is going to happen if, as all signs indicate, Congress sends President Trump a sweeping tax bill this week and he signs it before heading to Florida for Christmas.
Trump'sThea $4,000 salary increase for the average worker. And the Republicans on the House and Senate committees that wrote the final bill say a family of four with the median family income of $73,000 will get a tax cut of $2,059, at least through the end of 2025.
But it's an understatement to say the public is skeptical.
A national poll by Monmouth University released Monday found 47% of Americans disapprove and 26% approve of the tax bills that passed each chamber in recent weeks. Some 50% said they expect their taxes to go up, while just 14% say they will go down.
If the bill is approved — the House is likely to vote on it Tuesday and the Senate on Wednesday — how soon will people feel the impact?
Like the tax code itself, the answer is complicated.
Paychecks
Nearly all of the tax changes take effect next year, which means the 2017 tax return most people will file in April — as well as January payments for those who pay taxes quarterly — will continue to follow the current tax code.
But people may not have to wait until April 2019 to get a break if they're due one.
Most employees have income taxes withheld from their paychecks, and payroll departments base the amount withheld from each check on Internal Revenue Service tables that take into account annual salary and factors such as the number of children. The IRS has said new tables could be available as early as February, meaning people could see their take-home pay increase before the winter ends.
"We’ve been doing things like this for years," said Pete Isberg, a vice president at ADP, which handles payroll for 1 of every 6 American workers. "It's pretty routine to have a major tax bill get signed into law in late December."
One potential glitch: The W-4 tax form every employee signs telling their employer whether they are married and how many children they have appears to be invalidated by the bill because it eliminates the exemptions taxpayers get for themselves, their spouses and their children.
"That implies employers need to collect new forms W-4 and get them signed, theoretically early in the year,” Isberg said. “With a workforce of 150 million to 160 million, that would be a workload for employers and employees to get them signed. We've been talking to the IRS about that already."
Highlights: Here's what's in the final Republican tax bill
Another wrinkle to watch: Since the fiscal year began Oct. 1, Congress has funded the government with short-term spending bills, and needs to pass another one by Friday night to prevent a partial shutdown. The IRS may need a budget increase to deal with the crush of new rules to implement the tax bill, and it is not clear when Congress could make that happen.
Medical expenses
The tax deduction for significant medical expenses was nearly eliminated, but then lawmakers made it more generous in the final bill, and the change was retroactive to the beginning of 2017. That means taxpayers who itemize will be able to deduct medical expenses incurred in 2017 that exceed 7.5% of their incomes, instead of the 10% threshold in the current law. The 7.5% threshold also applies 2018, but goes back up to 10% after that.
No comments:
Post a Comment