Updates to 2024 Federal Taxes
IRS has updated tax brackets for 2024. See how this affects your first paycheck this year!
What is the impact of the stimulus package on individual's paychecks? Congress passed legislation giving single individuals a $400 credit for the year and married folks $800 per year. Media outlets broadcasted the news of the tax credit. ow, as the credit actually begins hitting paychecks, employees are wondering, "why am I getting more money?"
Q. My paycheck increased this week for some reason. My payroll department says it is because of the Stimulus package that was just passed. They can't find any details. What changed?
A. This was supposed to be so easy. Congress passed legislation giving single individuals a $400 credit for the year and married folks $800 per year. Media outlets broadcasted the news of the tax credit. It seemed that everyone was talking about it from the time it was signed until early March. The IRS was to implement this through a reduction in withholding rates. So...new tables were published in Publication 15-T. Employers were required to implement the new tables by April 1. Most payroll service bureaus have already implemented the change. Hopefully most employers not using payroll providers have the new rates and can begin withholding using the reduced rates.
Now, as the credit actually begins hitting paychecks, employees are wondering, 'why am I getting more money?' The credit works out to around $13 less per week being withheld for single filers. For married filers, the credit works out to about $26 per week. There is a free calculator available to help your employees understand the effect of the credit on their paycheck.
For more information, you can read the IRS press release about it here. The credit does not mean you will owe more taxes at the end of the year for federal purposes. When completing your 1040 form, you will determine the amount of tax liability, then subtract the credit amount as a payment against that liability just like the child tax credit. In situations where both spouses work, it will be very important to check with your tax advisor regarding this credit. If you both claim married on your Form W-4, you will both be given the credit in your paychecks. This has the potential to greatly under-withhold tax for your situation.
IRS has updated tax brackets for 2024. See how this affects your first paycheck this year!
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