More Taxpayers Will Owe The IRS In April Due To Under-Withholding, Report Says

[jpak]

Source: NPR

More Americans will be writing a check to the IRS in April because their employers are not withholding enough from their paychecks following the new tax law, the Government Accountability Office says in a new report.

Based on simulations run by the Treasury Department, the GAO says taxes for 30 million Americans — 21 percent of taxpayers — are being under-withheld by their employers, meaning they are getting a larger check this year, but will owe at tax time in April. According to the simulations, 73 percent of taxpayers will be over-withheld and receive a refund from the Internal Revenue Service.

When the simulation was run as if there had been no change in the tax law, 18 percent of taxpayers, or about 27 million, would have experienced under-withholding and 76 percent would have been over-withheld. In both scenarios, just 6 percent of taxpayers would have the correct amount of withholding.

Who should be concerned? According to the GAO, a hypothetical taxpayer who is married with two children, earning $180,000 annually, $20,000 of which comes from non-wage income and who itemizes deductions.

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Read more: https://www.npr.org/2018/08/01/634474267/more-taxpayers-will-owe-the-irs-in-april-due-to-under-withholding-report-says

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[Hugin]

1. Who is surprised by this?

That's the plan.

[Tom Rinaldo]

17. Exactly. Trick people into thinking they got a bigger tax cut so they vote GOP in Fall...

...realize they got screwed in the Spring when it is too late.

[lagomorph777]

24. I saw it coming and adjusted my witholding.

I hope a lot of Dems have done the same.

Trumpies can go fuck themselves; they deserve to be tricked.

[Dave Starsky]

20. I explained this to every Trump dumbfuck that I could.

I was told it was fake news.

Looks like the joke's on them.

[Sherman A1]

2. Time to adjust withholding amounts

Thanks for sharing this article.

[LiberalBrooke]

22. You have 5 more months to be at a different withholding rate if you change it now.

Talk to your HR person and make adjustments for the remainder of 2018. Alternately, save extra for taxes if you are disciplined enough to do so.

[Sherman A1]

23. Quarterly payments

Are another option.

[Achilleaze]

3. Frikken republicans pissing on US taxpayers

so they can enrich the already rich.

[still_one]

4. I suspect those in large blue states who pay high property taxes, and have home equity loans may

be in for a surprise when they find out they will be paying more taxes when they find out that they won’t have certain deductions or limits on those deductions they used to have

[dhol82]

13. Yup. My accountant has me doing quarterly deposits for an anticipated increase

on next year’s taxes.
Also got to pay more this year since I fell into the AMT by prepaying the real estate taxes last December.

[Astraea]

5. Am I reading this right?

It sounds like something my RW family members would hate. They make more than 180,000 a year, which I think makes them pretty well off.

[DeminPennswoods]

6. The IRS had to re-jigger withholding on the fly

since the GOP took away the standard deduction that was the basis for the old withholding form. Once my "tax cut" showed up, I readjusted my withholding back to what it was before the change.

The whole idea was to show the 99% more $s in their paychecks. It shouldn't be surprising that one way to do it was underwithhold taxes.

[blueinredohio]

7. My tax guy told me this in February when I had my taxes done.

Said everyone thinks they're getting extra money because of Trumps tax cut but if you don't raise your withholding you're going to owe next year.

[7962]

8. Thats when the excitement turns to disappointment.

I'ver told a few friends about losing the HELOC interest deductibility as well as student loan interest. Of course they didnt know.

[Fullduplexxx]

11. The new law suspends the deduction for interest on home equity indebtedness for the next eight years

The new law suspends the deduction for interest on home equity indebtedness for the next eight years.

But it turns out the suspension does not apply to all home equity loans (HELs) and lines of credit (HELOCs).



It just applies to those that are used to pay for non-home-related things, like paying off your credit card or buying a car.

But you can still deduct home equity loan interest that is used to pay for home improvements.



https://www.google.com/amp/s/amp.cnn.com/money/2018/03/08/pf/taxes/home-equity-interest-deduction/index.html

[7962]

34. Ahh I see. Well THAT sounds easy to enforce! "Yeah, I reworked my kitchen"

I doubt the IRS is going to spend time following up on people to see if they got a roof job or bought a car. Maybe if theres already an audit going on?

[gordianot]

9. This will be noticed.

With a Democratic House, Republicans will blame Democrats.

[watoos]

14. Pretty hard to blame Dems.

when Trump is on video bragging about filing one's taxes on a post card. Trump bragged too much about how he took care of his cult by getting them big tax breaks. Some of his cult will be in for a big surprise come refund time.

[gordianot]

27. Anus mouth will not have to even have to purse his lips.

His tiny fingers will twitler it out for those stupid enough to believe his every lie. Granted they are a minority but it is so easy to blame others for your own misery. Demagoguery and ignorance sells well in twenty first America. Trump and his Russians are only too happy to serve it up.

[watoos]

10. I don't think

that this is just going to affect people making 180k and up who itemize. I think this will also affect lower wage earners. Remember, Trump doubled the standard deduction, but he eliminated the deduction for dependents, exemptions. Last year people could deduct $4,050 per dependent, you, your spouse, and all your kids, and anyone else who qualifies. People who have a lot of kids are going to lose a huge deduction.

I kept telling Trumpers who claimed they were getting 20 bucks more a pay thanks to Trump, you better wait and see what you get back at the end of the year. Many people plan on using their tax returns to pay for their taxes or car and home owner's insurance or go on a vacation. I hope their plans aren't dashed if they get a lot less back than they used to.

[RobinA]

28. I Don't Know

I have a friend who is single and makes in the very low 6 digits with only a mortgage to deduct and she is getting hit by this. Luckily her accountant is able to adjust things so she isn't going to get clobbered in April, but this has NOT benefited her.

[peekaloo]

36. which is why L'il Marco "stepped up for the kids" to increase the child tax credit.

Yet sold them out by making it temporary all the while making the corporate cuts permanent.

Double the child tax credit to $2000 (which I think is a refund ? ) yet eliminate the $4050 exemption which you outlined above.



Double the deduction $12,000, increase the child credit $2000 yet eliminate the exemption $4050.....sleight of hand for us suckers.

[JPK]

12. THIS......

…...Is exactly what my tax person told me when I had my taxes done last April. She said essentially Trump and the Republicans gave them slightly more money in their paychecks but decreased the amount they will get back. The tax scam was purposely crafted for the tax hit to happen after the mid terms and hit next year. There's going to be a lot of pissed people come tax time.

[Dave Starsky]

21. I seem to recall that Bush II pulled a similar stunt.

Give people a "tax break"; take it all back the spring after the election.

Well, fool me once, shame on you. Fool me twice, shame on... shame on... Fool me, can't get fooled again!

[lagomorph777]

25. Yup, they got this from the Bush Jr playbook, and enhanced it.

Love the quote.

[llmart]

35. Yep. I remember it well.

The same stupid people keep falling for this though. I clearly remember several coworkers complaining come tax time that they ended up paying more.

[peekaloo]

37. I remember that. It was actually a loan from your next year's refund.

Oh how I laughed at the Bu$hbots when that realization hit.

[Vinca]

15. We're self-employed and pay quarterly taxes and right off the bat our accountant

increased our payments. I assumed it was based on losing some deductions. Now I'm hoping they've upped it enough. Fucking Trump.

[woundedkarma]

16. 180k a year? My heart breaks for them.. n/t

[FBaggins]

18. This strikes me as a non-story that could have been far more relevant

A three percent difference in how many people are predicted to be under-withholding and over-withholding? That doesn't seem at all significant... particularly without any estimate of how much over/under each group is.

This should not have been the analysis that Democrats asked for. They should have asked the GAO to analyze the amount of over/under-withholding in each scenario. It would be so much more useful to be able to say something like "Republicans love to point out that the average family of four will take home $1,123 in their paychecks this year, but they failed to mention that half of that amount wasn't a tax cut, it was a loan that they'll pay back when they file their taxes next year. Families used to large tax refunds in February to pay their Christmas bills will find an unpleasant present under their trees this year"

As things stand... we don't have anything close to the information we need to make that argument. It looks more like the average amount under-withheld to artificially make the tax cut seem larger... could be tens of dollars. Nothing to work with there.

[Javaman]

19. who the hell makes $180k a year?

I bet most of the people who will be paying out; are the same folks, myself at one time, so poor that they need every penny to get by and they worry about paying the government later.

[MiniMe]

26. That is because of the IRS tax tables, has nothing to do with the employer

One of the Bushes pulled this sh*t, change the tax tables so he could say "You have more money in your paycheck", which was true because they just messed with the tax tables. But you owed a lot of taxes come April.

[mitch96]

29. I'll see next April....

I was curious so I'm gonna see what happens.. I'm on a fixed income... I know what I paid in and what I got back the last few years. With no changes I'll see if I get more back or have to pay...
This is the only way I know how to compare apples to oranges in this quandary.. When I worked my income went up and down yearly so it was difficult to see when Bushy's tax cut came thru.. All I remember was I got a one time $300 check....... big woop.
m

[jmowreader]

30. Hopefully my coworkers won't be on the same situation

I work for a really big company, and we have outposts in five states. We have no idea what this bill will really do, so we left everyone’s withholding as it was under Obama. We’ll adjust after people file their taxes and figure out what they want to do.

If the bill does lower someone’s taxes, they’re going to have a really good day when they file.
If it either doesn’t lower them or actually raises them, it won’t hurt that much.

I rue the poor bastards who think this damn tax bill is going to shower them with savings, so they lowered their withholding. You know they’re spending the money, and you know they’re going to get fucked.

[Gothmog]

31. My son had to adjust his withholding due to these tables being wrong

[TexasBushwhacker]

32. 21% under withheld and 73% over withheld

What was it before? There are always people who under withhold on purpose, because they don't want to give the government an interest free loan. There are folks who over withhold because they like getting big refund checks. I wonder what these percentages were before the Trump tax plan, because I have a feeling they weren't that different.

[Mr.Bill]

33. The republicans will tell the voters

this can all be fixed with a bigger tax cut. And every trumpsucker will believe them.