Millions of taxpayers could wind up owing for 2018

[Yo_Mama_Been_Loggin]

The tax law passed late last year included slews of changes that will have wide impacts across the U.S. Among them is a likely jump in the numbers of Americans who'll owe taxes when they file 2018 returns. The Government Accountability Office (GAO) recently issued a report warning that more than 4.5 million taxpayers will come up short next April, unless they act now to adjust their withholding amounts.

This is because the tax law limited or even eliminated many itemized deductions claimed by millions of taxpayers -- nearly 28 million of them for 2017. The biggest contributors to this are the new limits on state and local tax deductions (the SALT deductions), a restriction on the amount you can deduct for home mortgage interest and the elimination of the deduction for job-related expenses.

Those most likely to owe tax for 2018 are those who itemize deductions. The GAO looked closely at this group and provided more clarity as to who it will include. Specifically, married taxpayers who itemize deductions, with two children under age 17, income exceeding $180,000 from one or more jobs and who have $20,000 or more in nonwage income (dividends, interest or capital gains) are highly likely to have to pay additional tax when they file next year.

The IRS recommends that taxpayers who itemize should do some planning now to avoid the sticker shock of a large tax bill for 2018.

https://www.msn.com/en-us/money/personalfinance/millions-of-taxpayers-could-wind-up-owing-for-2018/ar-BBN7wrE?li=BBnb7Kz

[Sherman A1]

1. I would urge folks to look at their 401k's

and up their contribution as a potential offset. Naturally every situation is different, but it never hurts to look at all the options available and if a larger 401k contribution will help, why not put the money away for yourself?

[riversedge]

2. k for visibility

[Hoyt]

3. I would bet a good percentage of those 4.5 Million people are used to owing money in April.

It may be a little more next year for some, but I would bet families who earn $180,000 from wages and have $20,000 in dividends, interest or capital gains, will scream but have little problem coming up with the money or getting a 12 month payment plan from the IRS and state revenue departments.

To the extent those making above $180K or so get hit with a tax increase, that's probably good. Now, if we raise tax rates on folks making considerably more and corporations, maybe we can fund healthcare and better education. (For healthcare, we'll need to raise rates on all but the poor if we abandon premiums.)