New Withholding Tables

[Nashville]

Just installed new withholding tables for one of my customers.

Good grief! Has anyone else noticed how liberal they are? Beyond the 10% bracket, the gaps are HUGE. Meaning people will have less withheld from their pay. More to spend (in this election year) and will not impact their economics until their tax returns are filed early in 2017. At that time, their refunds (or amounts due) will pay for this huge change in withholding.

The board has a policy against politically-slanted dialogue, but I think as preparers we have the right to take notice and discuss this as sometimes politics is unavoidable. And this is not partisan (please don't try to get into partisan) as both sides have done similar things in the past. This appears to be a very public way of putting more money into people's pockets during 2016, without any downside to the population until after the election.

As a preparer, I think my only recourse is to let my customers know to expect a worse refund in 2017 and to plan for it, or adjust their withholding. And of course, they will be asking me how fewer dependents to claim. My standard advice to all parties is to add a fixed amount to every pay period, that way the fixed amount will be paid in regardless of how many games are played in the withholding tables.

[kathyc2]

Just installed new withholding tables for one of my customers.

Good grief! Has anyone else noticed how liberal they are? Beyond the 10% bracket, the gaps are HUGE. Meaning people will have less withheld from their pay. More to spend (in this election year) and will not impact their economics until their tax returns are filed early in 2017. At that time, their refunds (or amounts due) will pay for this huge change in withholding.

The board has a policy against politically-slanted dialogue, but I think as preparers we have the right to take notice and discuss this as sometimes politics is unavoidable. And this is not partisan (please don't try to get into partisan) as both sides have done similar things in the past. This appears to be a very public way of putting more money into people's pockets during 2016, without any downside to the population until after the election.

As a preparer, I think my only recourse is to let my customers know to expect a worse refund in 2017 and to plan for it, or adjust their withholding. And of course, they will be asking me how fewer dependents to claim. My standard advice to all parties is to add a fixed amount to every pay period, that way the fixed amount will be paid in regardless of how many games are played in the withholding tables.

I'm not sure what you are looking at as far as withholding tables, but the ones in Circular E have not changed other than small amounts for the inflation allowance in brackets.

[Nashville]

Publication 15

Most recent version effective for payrolls 01/01/16 and beyond:
(My installation was for bi-weekly. All brackets are factored weekly X 52 divided by # of payrolls)
...for SINGLE
10% threshold begins at $88 versus $87 last year (no big deal)
15% threshold begins at $443 versus $355 last year - up 25%.
25% threshold begins at $1535 versus $1086 - up 41%
28% threshold begins at $3592 versus $2050 - up 75%
33% threshold begins at $7400 versus $3790 - up 95%
35% threshold begins at $15,985 versus $8546 - up 87%

...for MARRIED even more dramatic
10% threshold begins at $329 versus $331 last year - down 1%
15% threshold begins at $1042 versus $709 - up 47%
25% threshold begins at $3225 versus $2172 - up 48%
28% threshold begins at $6171 versus $2934 - up 110%
33% threshold begins at $9231 versus $3048 - up 203%
35% threshold begins at $16,227 versus $6964 - up 233%

Of course, these glaring increases are part of an aggregate cartography and lose some of their effectiveness when blended with the big picture. But on my client's first bi-weekly paycheck, most employees (salaries between $50K and $80K) will have their annual withholding drop between $1000 and $1500. Never had a difference anywhere near this large in any previous year.

I should add that most of us by now have seen what the 2016 standard deductions and brackets really are. (What they really are and not what the withholding says) The increases are tiny, nowhere near the impact of what the withholding table is doing.

[kathyc2]

Most recent version effective for payrolls 01/01/16 and beyond:
(My installation was for bi-weekly. All brackets are factored weekly X 52 divided by # of payrolls)
...for SINGLE
10% threshold begins at $88 versus $87 last year (no big deal)
15% threshold begins at $443 versus $355 last year - up 25%.
25% threshold begins at $1535 versus $1086 - up 41%
28% threshold begins at $3592 versus $2050 - up 75%
33% threshold begins at $7400 versus $3790 - up 95%
35% threshold begins at $15,985 versus $8546 - up 87%

...for MARRIED even more dramatic
10% threshold begins at $329 versus $331 last year - down 1%
15% threshold begins at $1042 versus $709 - up 47%
25% threshold begins at $3225 versus $2172 - up 48%
28% threshold begins at $6171 versus $2934 - up 110%
33% threshold begins at $9231 versus $3048 - up 203%
35% threshold begins at $16,227 versus $6964 - up 233%

Of course, these glaring increases are part of an aggregate cartography and lose some of their effectiveness when blended with the big picture. But on my client's first bi-weekly paycheck, most employees (salaries between $50K and $80K) will have their annual withholding drop between $1000 and $1500. Never had a difference anywhere near this large in any previous year.

I should add that most of us by now have seen what the 2016 standard deductions and brackets really are. (What they really are and not what the withholding says) The increases are tiny, nowhere near the impact of what the withholding table is doing.

I don't know where you are getting the last year numbers from, but they are not what was in the 2015 circular E.

[Snaggletooth]

Old Pub 15

I don't know where you are getting the last year numbers from, but they are not what was in the 2015 circular E.

Do you have access to the 2015 Pub 15? Can no longer be retrieved on IRS.gov, unless they have moved it to an archived area.

[kathyc2]

Do you have access to the 2015 Pub 15? Can no longer be retrieved on IRS.gov, unless they have moved it to an archived area.

The redesign of website makes them harder to find, but they are all still there. https://apps.irs.gov/app/picklist/li...mitSearch=Find

[TaxGuyBill]

Do you have access to the 2015 Pub 15? Can no longer be retrieved on IRS.gov, unless they have moved it to an archived area.

https://apps.irs.gov/app/picklist/list/priorFormPublication.html;jsessionid=CHDNNbTpCnkXyKJl9QsBcg__?value=15&criteria=formNumber&submitSearch=Find

EDIT: Kathy beat me to it again. :-)

[Nashville]

Old rates were phony

Kathy and Bill: Turns out the old rates for 2015 installed in their payroll system were probably VERY old.

Like most people, any time I can deflect the blame and place it on someone else, I am spineless enough to do so. But this is my first year updating the tables, as they had previously been done by a staff person. Looks like the rates for the old year are very, very old.

Thanks for pointing this out. The new rates for 2016 (and I suppose all the political skullduggery I attached to them) are only very modestly different.

[Burke]

Better warn these people to expect less refunds next year!