The new tax law, the Tax Cuts and Jobs Act, passed in December of 2017, could present unwanted surprises to millions of taxpayers filing their 2018 income tax returns. According to the Government Accountability Office, this new law may find taxpayers have actually under-withheld their taxes.
Oregon Senator Ron Wyden, of the Senate Finance Committee, sent a letter last week to the Internal Revenue Service Commissioner, Charles Rettig, stating that “While the tax law expanded the child tax credit and standard deduction, it also repealed personal exemptions and many itemized deductions and capped the state and local income tax deduction at $10,000.” Due to the rushed tax bill implementation, many taxpayers did not have the understanding or the time to follow the IRS’s suggestion to use an IRS website withholding calculator to adjust their taxpayer withholding.
For taxpayers who may have under-withheld, through no fault of their own, Wyden requested that any penalties would be waived. He continued saying, “It seems unavoidable that millions of taxpayers who are expecting critical tax refunds will instead owe taxes when they start to fill out their returns in a few short weeks……..While the IRS cannot spare taxpayers who have been under-withheld from paying what is due, IRPAC recommends that IRS waive under-withholding penalties on taxpayers for this filing season so as not to add insult to injury.”
At this time, there has been no indication from the IRS that they will waive any under-withholding penalties.
Please contact us for more information on this topic, or to learn how Wegner CPAs tax specialists can help.
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