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Tax code change may result in more owing money

On Behalf of | Aug 2, 2018 | Income Taxes

Taxpayers in Georgia and throughout the country could owe the IRS money in April 2019 according to the Government Accountability Office, which says that up to 30 million people have not had enough money withheld for taxes by their employers. This is because of changes to the tax code implemented in 2017. Conversely, simulations run by the GAO show that many other taxpayers have had too much withheld and will receive a refund.

On average, the tax cut resulted in a middle-class family receiving an extra $930 per year. Simulations that did not account for the new law found that 18 percent of taxpayers had too little withheld compared to the 21 percent after taking the change into account. In both scenarios, only 6 percent of workers had the right amount of withholding from their paychecks.

The IRS has told taxpayers that they should review their withholding levels and make adjustments as needed. Those who have kids, make roughly $180,000 and who itemize deductions may have the most to gain from reviewing their withholding status. While the Treasury and the IRS are both responsible for adjusting withholding tables, the exact responsibilities of each agency are not spelled out clearly. The simulations were run at the request of Democrats in both the House and the Senate.

Individuals who are concerned about how changes to the tax code may impact them could benefit from consulting with an attorney. It may also be possible to consult with the IRS directly to have questions answered. Those who are being audited may have an attorney negotiate with the federal government on their behalf.