Although the Tax Cuts and Jobs Act (TCJA) that was recently enacted has promised to cut taxes for most Americans, some experts are saying that more taxpayers will owe taxes in 2019.
The Tax Cuts and Jobs Act (TCJA) was signed into law last year, with the promise that most taxpayers would get a tax break. But tax payers need to be careful or they may end up owing more. A report from the General Accounting Office is warning that taxpayers need to adjust their withholding, or they may end up owing more. In fact, more than 30 million will owe taxes next year, an increase from last year.
All the confusion comes from the fact that the TCJA made significant changes to itemized deductions that are normally claimed on schedule A. Some of those changes include limits on the deductions that can be claimed for State and Local Taxes (SALT). There is also a cap on the amount you can borrow for home mortgage interest and exclusions for job related expenses.
Because these changes may cause confusion to some taxpayers, the IRS is encouraging taxpayers who itemize to do a careful review of their tax data using the withholding calculator which can be found in the IRS website.
It is also suggested that additional steps be taken by completing a form W-4 to help employers determine how much federal tax to withhold from paychecks. Taxpayers are reminded that withholding too little will cause them to owe at tax time while withholding too much will create a refund. The key is to maintain a balance.
Most taxpayers over withhold which is encourages by the feds because it means there is less likelihood of noncompliance. This tax year make sure your withholdings are in order to avoid owing anything when it comes time to do your taxes. If you are still confused, go see a tax professional who can answer all your tax questions.