Some early filers are discovering that they either owe the IRS, or they’ll be getting a smaller-than-expected return.
In 2018, the Treasury Department and the IRS updated the withholding tables to reflect the new tax cuts and Jobs Act.
Some major changes:
- End of personal exemptions,
- Doubling of the standard deduction, and
- Reduced individual income tax rates.
In addition, the changes complicated payroll withholding, so that not enough money was withheld by employers in many cases, meaning that people now owe more taxes. The new law also capped IRS deductions for paid state and local taxes, including real estate taxes, resulting in a nasty surprise for many filers.
The IRS had estimated it would issue about 2.3 percent fewer refunds this year as a result of the changes in the federal tax law, according to Bloomberg. MSNBC reports that 30 million Americans will owe the IRS money this year