"[Many taxpayers unexpectedly owed, or had significantly reduced refunds compared to previous years] because the 2018 Tax Cuts and Jobs Act made major changes to the tax laws, which in many cases resulted in lower tax withholding from [their] paychecks.
To avoid owing a large tax amount, it is highly recommend that everyone:
1. Perform a paycheck checkup using the Withholding Calculator on IRS.gov; and
2. Submit a new W-4 form to your employer.
The calculator will help determine the right amount of withholding and can help prevent having too little (or too much) tax withheld.
Tax law changes affecting withholding include:
- Reduced tax rates;
- Elimination of personal exemptions;
- Increased standard deductions: $12,000 for singles, $18,000 for heads of households and $24,000 for married couples filing jointly;
- Increased child tax credit: $2,000 per child and a new $500 credit for other dependents; and
- Changes to itemized deductions.
A paycheck checkup is especially important if you:
- Are a two-income family
- Have two or more jobs at the same time or who only work part of the year
- Claim credits like the child tax credit
- Have dependents age 17 or older
- Itemized deductions in 2018
- Have high income or a complex tax return
- Have a large tax refund or tax bill for 2018
We hope this information helps you to have the appropriate tax withholding, and avoid owing large tax amount.
Tung"
Tung T. Tu, CPA, LLC
7297 Lee Highway Ste D2
Falls Church, VA 22042
Phone: 703-636-5588; E-fax: 866-395-2378
www.tungtucpa.com
7297 Lee Highway Ste D2
Falls Church, VA 22042
Phone: 703-636-5588; E-fax: 866-395-2378
www.tungtucpa.com
