Source: http://www.foxnews.com/us/2018/02/02/workers-celebrate-more-money-in-paychecks-after-tax-cuts.html
February 2, 2018
Many workers nationwide are noticing extra money in their pay checks this week after instructions from December's tax overhaul went into effect.
“I just checked my paycheck and I have $100 extra dollars! That money will go to my church and help pay a bill,” Michael Diaz, of Houston, Texas, tweeted on Friday. “Thank you @tedcruz and @POTUS for the #TaxCuts $200 extra per month is not crumbs in my house!”
The "crumbs" remark made by Diaz and others referred to a remark from House Minority Leader Nancy Pelosi, a Democrat who opposed the bill. Pelosi, in a widely mocked comment, said bonuses relating to the tax cut amounted to "crumbs" for workers.
The bigger paychecks started Feb. 1 as employers began implementing the new withholding guidelines from the IRS, which dictate how much employers withhold from pay for federal taxes.
However, those whose checks remained the same shouldn’t fret – employers have until Feb. 15 to make the changes.
Treasury Secretary Steven Mnuchin has estimated the new rules will mean more take-home pay for about 90 percent of American workers.
“Looked at my paycheck today, took home $130 more than last paycheck. #Ilikecrumbs @NancyPelosi,” Rick Lovett, a Marine veteran from New Hampshire, tweeted Friday.
Julia Ketchum, a secretary at a public high school in Lancaster, Pennsylvania, said she was pleasantly surprised her pay went up $1.50 a week. She didn't think her pay would go up at all, let alone this soon. That adds up to $78 a year, which she said will more than cover her Costco membership for the year.
Todd Anderson of Texas and his fiance, who are both educators, got an extra $200 in their paychecks combined that they plan to use to cover the costs of a second baby on its way.
Wayne Love, who works in managed care in Spring Hill, Florida, got an extra $200 in his paycheck last week, which he said will help offset a $300 increase in the cost of his health insurance.
"I have heard time and again that the middle class is getting crumbs, but I'll take it!" Love said by email.
According to the nonpartisan Tax Policy Center, a middle-income household would on average get a tax cut of $930 this year, lifting their after-tax income by about 1.6 percent. That increase won't be perfectly reflected in their paycheck though.
That's because lower tax withholding on paychecks is just a piece of a complicated set of changes to tax law that the GOP pushed through in December. And what your employer withholds is based on an estimate of your tax obligation that includes many complex factors, but it's not a perfect measure.
As a result, taxpayers may find they are unintentionally over- or underwithholding for their taxes if they don't do some legwork.
Experts suggest that all taxpayers take a look the new IRS calculator when it becomes available later in February to ensure they are having the correct amount withheld. And they should update the information on their W-4 after the IRS releases a revised version later this year.
The IRS said the new withholding tables should produce an accurate withholding amount for people with simpler tax situations. But tax experts say those who will still itemize, have larger families or more complicated tax situations may want to take a closer look.
"If they haven't done it before, this is a really good year to talk to your tax professional," said Pete Isberg, vice president of government relations for ADP, a payroll provider.
The IRS, payroll and tax professionals have been scrambling to react to the passage of the new tax law. And the IRS says it plans to make further changes involving withholding matters in 2019. Many in the industry say they expect the IRS to update the W-4 form in 2019 in a more dramatic fashion to fully reflect the scope of the law.
No worker should anticipate a negative impact from the new withholding table if their pay remained the same, said Joseph Rosenberg, a senior researcher at the nonpartisan Tax Policy Center.
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"It's tough to be upset about more money in my pocket," said Jefferey Snively, an aerospace engineer who got a 4 percent bump in his last paycheck due to the lower tax rate.
Still, not everyone was pleased with the pay bump.
"Everyone is talking about getting more money in their paycheck because of the tax bill and I got $7 more than usual. Reaping the benefits man, totally proportional to the cuts the top 1% got," a user named Matt tweeted.
In addition to the higher paychecks, the Labor Department said Friday that U.S. employers added a robust 200,000 jobs in January and that wages rose at the fastest pace in more than eight years.
The Associated Press contributed to this report.
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