Different forms of speed dating

17 Aug

But the new tax system is different, and some of the questions from the W-4 are no longer relevant.For example, question “G” on the W-4 asks whether someone is in a household that earns less than 0,000 to determine whether they qualify for the Child Tax Credit.If companies don’t withhold enough income tax, taxpayers could experience short-term euphoria when they receive larger paychecks but then face a stunning tax bill in April 2019.Similarly, if Americans underpay their taxes in February and March, the government could run up a huge budget deficit, creating a cash crunch at a time when it is under immense pressure to raise the debt ceiling.“Our view is that would be an extremely tight time frame,” said Eira Jones, leader of Deloitte’s national employment tax practice.“It’s likely there would need to be a greater testing period.” Jones said March would have been a more practical goal for the paychecks to be adjusted.

Before the law’s passage, the IRS expected to be able to answer only 60 percent of the 100 million telephone calls it receives annually from taxpayers — a burden expected to increase under the new law.

In the next few days, the IRS plans to issue guidelines to companies and payroll processors on how to use the old forms to calculate tax payments under the law.

But there’s no simple switch-over calculation, and the uncertainty could mean workers severely underpaying or overpaying their taxes by thousands of dollars in 2018 — something that will likely remain unknown until they file their tax returns next year.

The process of withholding taxes from paychecks “will be less precise, but it’s really hard to quantify how much less and how bad it will be,” said Mark Mazur, a former senior IRS official who is now executive director of the Tax Policy Center.

For years, companies took some basic information from their employees into account before determining how much money to withhold from their paychecks, and this information was collected on the two-page W-4 form.