Taxpayers could be in for a big surprise when they file their 2018 federal income tax return.
In a survey* of more than 1,000 taxpayers, Liberty Tax® found that about 70 percent hadn’t checked their withholding in the last six months. That matters because with tax reform and the Tax Cuts and Jobs Act, withholding – the money your employer holds from your paycheck for tax purposes – has changed.
So, you may be like many taxpayers who are seeing more money in their paychecks each pay period, but you may also be getting too much. If that’s the case, you could end up with a tax bill when you file your taxes next year.
When was the last time you checked or updated your withholding at work?
|Within the last two years||31.96%||326|
|Within the last 6 months||30.49%||311|
|I haven't updated my withholding||37.55%||383|
Taxpayers aren’t familiar with the tax reform changes
The withholding change is one of many brought about by the Tax Cuts and Jobs Act. The law, signed in December by President Trump, also did things like changed the standard deduction – it nearly doubled for most taxpayers – and eliminated tax breaks like the personal exemption. Those changes will directly affect taxpayers, but, as the survey shows, 85 percent of respondents are “slightly familiar” or “not familiar at all” with the Tax Cuts and Jobs Act.
How familiar are you with the changes that may affect you under the Tax Cuts and Jobs Act, which became effective at the start of 2018?
|Not familiar at all||42.25%||431|
Many aren’t worried about owing taxes
Perhaps it’s no surprise, then, that almost half of the survey respondents aren’t worried about a tax bill or owing the government when they file their taxes.
How concerned are you that you may owe the government when you file your 2018 federal income taxes next year?
Not concerned at all
|A little concerned||37.06%||378|
What can you do about it now?
There’s still time to check and adjust your withholding. You can use a withholding calculator to see if you’re having the right amount of money withheld from your paycheck each pay period. You could also visit your tax professional for assistance. If either suggests you should make a change, then you may want to talk with someone in your HR department at work to see about changing your W4. It’s better to know before you owe.
* The data for this survey was collected using SurveyMonkey Audience and respondent recruitment information is available here: www.surveymonkey.com/mp/audience. SurveyMonkey is not associated with, nor does it endorse or sponsor the content included in this poll.