The biggest tax news of the year came out buried inside the pages of a report issued last month by the General Accounting Office. I call this the ‘biggest news’ because it adversely affects almost 30 million people. The people most likely to be affected are upper middle income taxpayers – in other words, my client base.
Spoiler alert: tens of millions of taxpayers who normally get a refund will owe taxes when they file their 2018 federal income tax return.
The problem is the little publicized tax increase provisions of the Tax Cuts and Jobs Act. While the tax cutting provisions of the ne law are widely publicized, the built-in tax increase provisions are complicated and therefor receive little attention.While, in fact, the total tax they pay may be less than in 2017, the amount of tax due is more than the amount currently being withheld in paychecks and other methods.
There are simple solutions to avoid tax increase shock: 1) tackle your7 mid-year financial planning to minimize the impact of these tax increase provisions under the new law, 2) adjust wage and backup withholding, 3) do these NOW.