May 072019
 
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Tax Cuts Make Small Refunds. Next year could be worse unless you act now. Ever since the Tax Cuts and Jobs Act has been passed many tax preparers have been delivering bad news to long time clients. They owe the government money. Even though the campaign promises were that they would get a big refund, they in fact owed the government money. The overhaul of the tax code–the first in three decades–caused much confusion this tax season, which was only worsened by the month long government shutdown. Many taxpayers were upset when they found out that they owed money to the federal government, even if their tax burden was lower. Tax Cuts Make Small Refunds. Many tax professionals are advising clients to act now before next year. If taxpayers don’t adjust their paycheck withholdings, next year could bring an even bigger shock. “IF they don’t go out and make a change now, they will have even less withheld in 2019, so their situation will just get worse,” according to multiple tax professionals. How did this happen ? New guidance from the Internal Revenue Service prompted employers to adjust workers paychecks last March in an attempt to match up what they would owe under the new plan. And in some cases–if taxpayers didn’t update the relevant withholding forms–they ended up owing money, even if their total tax liability dropped. The updated tables were in effect for about nine months last year. But this year, they’ll be in effect for all 12, meaning the problem will be magnified if taxpayers don’t take action–and soon. Withholdings are updated by filling out IRS form W-4 and giving it to your human resources department, or whoever handles payroll. It’s an eye-glazing task, which may be why nearly 80 percent of filers, according to H&R Block, failed to update. Early this season IRS statistics showed that the average taxpayer was down nearly 17 percent. Things have evened out since then: As of April 5, the average refund was $2833, down 1.1 percent from last year.
  •  05/07