A surprise tax bill?

[question everything]

The 2017 tax overhaul made major changes to the code, such as limiting the deduction for state and local taxes and greatly expanding the tax credit for children under 17. The Treasury Department required employers and pension payers to lower withholding for 2018. This change allowed taxpayers to get the benefits of lower rates right away.

The problem here is that the broad-brush withholding changes don’t accurately reflect each individual’s situation. Some people who have counted on a large tax refund in the past to pay bills for holiday spending or big-ticket items will find they won’t get one.

After the changes, the Internal Revenue Service posted a calculator to help people fine-tune their withholding or estimated taxes. But only a few million filers have used it, and more than 150 million individual returns are expected for 2018.

The IRS recently warned that the number of filers who owe tax or penalties for 2018 is likely to be larger than in recent years, adding that “many of them are likely to be people who have always gotten refunds.”

https://www.wsj.com/articles/seven-new-years-tax-resolutions-for-2019-11545993002 (paid subscription)

[nitpicker]

1. I had to adjust MY withholding

The new withholding was so tight that credit union interest was pushing me into potentially owing the IRS.

[Snarkoleptic]

2. Mrs. Snark is an acccountant and reviewed our situation at mid-year.

I increased my withholdings as it appeared we were going to have a swing of around $4.000 (to the bad).
It will be interesting to see the MAGA crowd lose their shit when realizing they've been played.

[sinkingfeeling]

3. The MAGA crowd will probably follow their leader and just

not pay them.

[Yonnie3]

4. I've done a first pass on my Federal tax and no surprises

I do an IRA withdrawal at year end and send most of it to the Federal Government. I don't send estimated payments so I avoid under withholding penalties.

I file with the standard deduction (increased for my age) and a schedule C (embarrassingly small this year) and have retirement and investment income as well. I owe a smaller amount this year as a percentage. I haven't figured out how much is due to the decrease in taxable Social Security and how much is due to the tax law changes. I do seem to be eligible for the 20% deduction for self-employed.

I had to laugh at the short 1040. I found I needed to add all but one of the schedules to the return to replace the missing lines. I still file paper because I've had issues with every tax software I've used. Issues were with having a non-taxable basis in my IRA (form 8606) and with the circular math involved in splitting health insurance premiums between the ACA and the self employed health insurance deduction.

I do personal taxes for myself, extended family members, and a sole proprietorship that grosses six figures so not all of the issues I've had with tax software were on my personal return.

Tax payers losing itemized deductions may indeed have a bigger tax bill.

[question everything]

5. Not so much the itemized deductions, I think that we can still do that

it is the exemptions - $4,000 a person - that increase out tax bill, especially after selling some stocks. Assuming Sch. D and the worksheet for dividends stay the same.

[Yonnie3]

6. For some it is the itemized deductions that will hurt as well

I have no claimable dependents other than myself so I didn't think of the exemptions, my bad.

The limit on State and Local Taxes Deduction (SALT) will hurt some in high tax states.

https://www.thebalance.com/new-tax-bill-itemized-deductions-4160594 is just one of many articles on the web about this.

[question everything]

7. That's true. Won't affect us but it will many

many in district where their (former) R member of Congress voted against his and her constituent. Exhibit A - Orange County, CA.