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About 3 million more taxpayers to owe IRS in 2018 than 2017

On Behalf of | Feb 20, 2019 | Income Taxes

The federal tax overhaul that went into law in 2017 has exposed many taxpayers in Georgia and around the country to unexpected income tax bills. According to the Government Accounting Office, roughly 3 million more people than last year will have failed to withhold sufficient income taxes from their paychecks to avoid owing when they file their 2018 federal tax returns. One tax accountant explained that entitlements to withholding allowances that people had grown to expect were reduced. This translated into people not having enough money taken out of their paychecks. The loss of some itemized deductions have also produced higher tax liabilities.

The elimination of itemized deductions for state and local income, sales and real estate taxes above $10,000 formed a primary source of tax liability resulting from the 2017 Tax Cuts and Jobs Act. Another tax accountant noted that people who live in regions with high taxes have lost their ability to deduct some of those expenses from their federal taxable income.

The additional loss of miscellaneous itemized deductions also produced significant expenses for some people. Work-related expenses for home offices, training, and professional publication subscriptions have been taken away. Other losses include deductions for investment and tax preparation fees.

Unexpected tax bills will naturally concern a person, who might eventually experience negative consequences like a tax lien or wage garnishment. Legal representation could be appropriate when someone needs to respond to IRS demands for payment. An attorney could counter claims of tax evasion and strive to broker a settlement that grants a person sufficient time to pay.

Source: Barron’s, “Tax Season Is Here and a Lot of People Didn’t Withhold Enough From Their Paychecks“, Dan Weil, Feb. 18, 2019