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CNN Live At Daybreak

Detecting a Bigger Paycheck

Aired July 26, 2001 - 08:57   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL LIN, CNN ANCHOR: Finally, this morning, a reality check for your paycheck. Take-home pay may be a bit fatter in the weeks ahead, but don't expect a windfall.

COLLEEN MCEDWARDS, CNN ANCHOR: That's right; payroll departments will be adjusting for the new tax refund. But you may have to watch carefully in order to detect it.

CNN's Valerie Morris explains.

(BEGIN VIDEOTAPE)

VALERIE MORRIS, CNN CORRESPONDENT (voice-over): With the first of those rebate checks in the mail, many taxpayers can now look forward to a reduction in their payroll taxes. For income earned after June 30, 2001, taxpayers who fall into the 28 percent bracket and above will see their federal withholding rates fall by half a percent.

GENEASE PETTIGREW, H & R BLOCK: The employees will receive an additional amount in their paychecks because with the lowering of the tax brackets, that means that less taxes will need to be withheld.

MORRIS: A single person earning about $60,000 in gross income will get a boost of about $20 a month as will a married couple with two kids and earning $85,000 a year. Meanwhile, a married couple making $130,000 a year with children will see an extra $57 a month.

The IRS didn't set a deadline for employers to make these changes. Specialists say most of the larger employers, especially those that use outside payroll services have already adjusted their employees withholding to account for these changes. However, smaller businesses are likely to take more time to do so.

Check your most recent pay stub. If you qualify for the cut and there's not a slight pay increase from June that means your employer hasn't yet made the change. Don't worry, you'll get that money back in a refund in April but do notify your human resources department.

STUART KESSLER, ATTORNEY: Knock on the door of the payroll department or the boss and say, "Hey, you know, you got the new payroll withholding charts up-to-date? If not, I can get them for you. I can get them on the Internet. I can get them from the IRS." MORRIS (on-camera): You can adjust your withholding level yourself by filling out new W-4 and that way you'll get the tax relief you're due now.

That's your money. Valerie Morris, CNN Financial News, New York.

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