Tax relief question

[TexasErin]

Does anyone know?
I heard that they were going to distribute new tax charts to employers so that less taxes would be taken out of paychecks. Have they done this yet or has this been cancelled? Just curious since I have not seen an increase in pay.
Or, on a related note, when are the additional tax refunds coming out?
Thanks,
Erin

 

[kinlaw6450]

I thought that had already been done. Our paychecks this week reflected it!

 

[Steve H.]

New tax tables are (I believe) required to be in place by tomorrow, July 1st. They've been available for a couple weeks now, so some people have been receiving the tax savings for a paycheck or two already -- it depends on how quick your company's payroll department (or outsourcer) was in changing the tax tables.

And the $400 refunds start getting mailed mid-July or so -- there's an exact time table on http://www.irs.gov

 

[always quiet]

Question kind of related to this topic...maybe someone will be able to advise me.

DH doesn't claim any of our 3 kids on his paycheck (don't know if it's the W-4 or W-2....can never keep them straight! ). Since he doesn't claim them, his paycheck amount won't change? Do you think he should at least claim one of the kids now so his taxes would be lower? We don't claim the kids during the year so come tax time, there's a bigger refund since more is taken out during the year. His company just raised his insurance premium (along with raising the deductibles! ) and thought this might help off set the difference.

Any suggestions?

 

[Steve H.]

No, the tax rate change is not related in any way with kids or with the way you filed your W-4 form. All the tax brackets decreased in varying degrees, so for the most part, everyone should see at least a slight increase in net pay (due to a decrease in Federal taxes withheld.), children or no children.

 

[KathyTX]

Always quiet,

Like Steve says, your DH's monthly withholding amount will still change, regardless of the number of exemptions he has withheld.

Although the tax rebate checks that will be coming out this summer are based on child credits, many other tax cuts went into effect which lowered overall tax rates.

Only you can decide whether you want more of your money now (claiming all of your exemptions for withholding), or whether you'd like to continue letting Uncle Sam keep it until tax filing time.

If you follow the IRS link Steve provided above, you'll find the new tax withholding tables and you can calculate what your withholding will be with whatever number of exemptions you like!

 

[lazarru]

I would say you should claim at least 1 of the children for payroll. I know some people love getting that big refund check, but really that means that you are loaning the government money for free all during the year. If your getting back more than a couple of 100 dollars a year, you could invest that money yourself and actually make something on it.

 

[DocRafiki]

Originally posted by lazarru
I would say you should claim at least 1 of the children for payroll. I know some people love getting that big refund check, but really that means that you are loaning the government money for free all during the year. If your getting back more than a couple of 100 dollars a year, you could invest that money yourself and actually make something on it.

Thanks-- You answered my question before I got to ask it. I was wondering what good could come from letting the government keep your money all year when you can either save interest by paying your debts earlier, or make more interest in investments throughout the year. I was also thinking that if your company matches 401K contributions and you're not meeting the maximum, you're really missing out on some money. (Sorry if that is unclear; I know nothing about taxes and the correct terminology).

 

[lazarru]

You are correct about 401k, if you company matches up to a certain % then you should make sure your are contrib. at least that amount. It's really free money that they are giving you. Alot of companys are slowly dropping with % they match to and also how much they match, so if your company is doing it jump on it.