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Uncertainty about payroll withholding emerges with new tax law

On Behalf of | Jan 16, 2018 | Income Taxes

The changes to federal income taxes passed late in 2017 have left some people in Georgia wondering what to withhold from their paychecks. The Internal Revenue Service has issued new withholding tables, but the agency has not yet had a chance to provide employers with new W-4 forms. Although employers may apply information from their workers’ existing W-4 forms, these forms do not match the new tax system. People might end up with miscalculated deductions from their paychecks.

A director of a large payroll processing company said that withholding errors could increase. He advised people with complex tax filings to examine their withholding closely. The IRS plans to build an online tool where people can enter their income and receive information about their tax obligations. Because the tax changes removed personal exemptions, people might need to alter their current rate of withholding.

The fact that the Republican tax law passed before people had a clear way to adjust their payroll has prompted Democrats to express concern that people will owe more than expected at the end of the year. Some lawmakers accuse the administration of purposefully confusing the process to hide the effects of the new tax law. Treasury Secretary Steven Mnuchin said that political goals did not influence the timing of the legislation.

Complexity is nothing new for federal income taxes. A person encountering trouble with the IRS might want legal representation. An attorney who litigates tax issues may interpret any notices sent from the agency and explain how to respond. If an audit is required, an attorney may assist with the organization of financial records. The person could also gain legal advice before answering questions from tax authorities. Assistance from an attorney may enable someone to amend a return, negotiate a settlement or defend a position in court.