Lawndale Tribune
The Weekly Newspaper of Lawndale
Young Martial Artists Holding
Court at Community Center
The kids from the Little Dragons class (ages 5 to 10) show amazing discipline during a recent class at the Lawndale Community Center.Photo Courtesy of Lawndale Community Center/Lawndale Soo Bahk Do.
Bonuses, Bigger Checks Promised to Workers
By Rob McCarthy
A message from the taxman can usually be
summed up in two words: Pay up. So it’s a
pleasant surprise when the Internal Revenue
Service announces that many taxpayers have
more money coming their way soon.
Tax season, which opened on Monday, puts
the IRS in a giving mood and this year is no
different. When Congress approved a tax code
overhaul in late December, the changes included
lower tax rates for individuals. The IRS has posted
the new tax tables on its website, and expects
employers to begin using them in February.
“Many employees will begin to see increases
in their paychecks to reflect the new law in
February,” the IRS said, without giving an
estimate about how many U.S. workers’ takehome
checks will rise.
Congress’ new law won’t affect current tax
returns for 2017, though it did raise the standard
deduction for individuals to $11,000, heads of
household to $18,000, and married couples to
$24,000. For people with simpler tax situations,
the new tables are designed to produce the correct
amount of tax withholding. The revisions aim
to avoid a common taxpayer mistake: over- or
under-withholding of income taxes.
The Tax Cuts and Jobs Act passed by Congress
last December is predicted to deliver modest
tax cuts to middle-income people. The Tax
Policy Center in Washington, D.C., estimated
an average tax cut of $1,200 for all households
in 2018, which won’t be seen until next year’s
income tax returns are filed. But, the larger
paychecks don’t have to wait that long.
The time it will take for employees to see the
result of tax cuts legislation on their paychecks
will vary, according to the IRS. Those hikes in
take-home pay depend on the employers and
how quickly they calculate federal withholdings
using the 2018-revised tables. “Employers
should begin using the 2018 withholding tables
as soon as possible, but not later than Feb. 15,
2018,” the IRS said.
Whether taxpayers really see any extra
money depends on whether they read their pay
stubs. A finding by the Electronic Payments
Association suggests that any slight change could
go unnoticed by the majority of U.S. workers.
The association reported that 82 percent of U.S.
workers use direct deposit instead of a paper
check. If they read their electronic pay stubs,
they’ll see a difference.
There’s an added bonus in the tax rate
change for workers. Employees do not have
to do anything at this time, though the IRS is
revising the standard W-4 withholding form that
each employee fills out at time of hire. “The
new withholding tables work with the Forms
W-4 that workers have already filed with their
employers to claim withholding allowances.
This will minimize burden on taxpayers and
employers,” the IRS said.
The tax code changes took effect on Jan. 1,
just days after the House and Senate approved
the biggest tax reform legislation in decades.
Companies since have announced bonuses for
employees because Congress did away with
the previous corporate tax rates and created a
new rate of 21 percent.
Several airlines are among the employers
who are passing along the corporate tax cuts.
Alaska, American and Southwest Airlines all
pledged $1,000 bonuses to their employees.
Alaska went a step further and offered $118
million in incentive bonuses to its 23,000
workers nationwide.
Other companies and entities that do business
in the South Bay that have promised tax cut
bonuses include:
- Bank of America: $1,000 bonuses to about
145,000 of its workforce.
- FedEx: $200 million in raises, about twothirds
of which will go to hourly team members.
The delivery service giant also plans to contribute
$1.5 billion to its pension plan.
- Home Depot: Gave one-time cash bonuses
of $1,000 for hourly associates before Jan. 1.
- Honeywell: Increased the 401(k) match for
employees in the U.S., Canada and Puerto Rico.
Financial institutions and banks, including
Wells Fargo and Washington Federal, raised staff
salaries and bumped the company minimum wage
to $15, using the corporate tax savings. Verizon
gave employees, excluding its top management,
50 shares of the telecom company’s restricted
stock. Apple was even more generous, handing
out $2,500 in stock to most of its employees.
Not everyone will enjoy a tax reduction under
the new law. While most taxpayers will pay less,
some taxpayers will pay a slightly higher tax
rate for 2018, according to Executive Director
Kathy Pickering with The Tax Institute. Highearners
with a marginal tax rate of 35 percent
(up from 33 percent) will be most affected.
Even if you didn’t receive a celebratory bonus,
the IRS said that 70 percent of taxpayers are
expecting refunds this year. The tax season
opened Monday and runs Jan. 29 through
Tuesday, April 17. The filing period is five days
shorter than last year, putting added pressure
on tax preparers and self-filers to make the
deadline.
The IRS says 90 percent of refunds are
issued in under 21 days, but to expect delays
with returns that claim the Earned Income
or Additional Child Tax Credits. The Earned
Income Tax Credit is for working people with
low to moderate income. To qualify for this
refund, you must file a tax return, even if you
do not owe any tax. According to the agency,
“The IRS expects the earliest EITC/ACTC
related refunds to be available in taxpayer bank
accounts or on debit cards starting on Feb. 27,
2018, if they chose direct deposit and there are
no other issues with the tax return.”
For the second consecutive year, April 15
falls on a weekend -- so the tax return filing
deadline falls two days later on a Tuesday. •
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Herald Publications - Inglewood, Hawthorne, Lawndale, El Segundo, Torrance & Manhattan Beach Community Newspapers Since 1911 - Circulation 30,000 - Readership 60,000 (310) 322-1830 - February 1, 2018