Tax Cuts and Jobs Act Fallout
The fallout from the Tax Cuts and Jobs Acts continues. Hopefully it will ease enough that I can write about something else next week. But for this week …
First, came the release of the 2017 Annual Report to Congress from National Taxpayer Advocate Nina E. Olson. The most interesting part of this may have been concerns expressed about how the IRS would be able to implement all the new rules.
That struggle is connected to the reductions in IRS funding that have been coming throughout the past decade or so. I have written about this in the past, and how it has resulted in a decrease in the number of audits. Granted, this sounds like good news, but just ask anyone who has had business with the IRS (or had to face one of those audits) that required talking to an actual person with the organization and how difficult it was to reach one.
With the partisan bickering and then wondering what the fallout would mean for one’s individual taxes, it is not a real surprise that no one really worried too much about how the new rules would affect the IRS itself. It is not as if anyone holds too much sympathy for the organization anyway. If they are already having issues carrying out the agency’s business, though, it is easy to understand how a set of new rules would further hurt its efficiency.
This feels much like how things were in the wake of the passage of the Affordable Care Act. We all knew that tax credits were going to be involved, and reporting on if one had health insurance would become part of a tax return, but it all felt a little too much up in the air before it came time to actually file. We got through that time, though, and we will get through this one. It just appears that it really will take more than a year to fully appreciate how this will all shake out.
The second thing to report, though, is that some of these things are starting to shake themselves out already, as the IRS has updated its income withholding rates to reflect the new standards. This means that many people could see a little more money in their paycheck over the next few weeks.
Without getting into deep numbers, what this means is what is being withheld in your paycheck is being adjusted so that your tax return will look similar when it comes time to file for the 2018 year. If you have set your withholding to come out even at the end of the year, it still will. If you set it to receive a refund, chances are good you will still receive one.
While all this stuff is at the front of our minds, though, it might be time to think about adjusting your withholding. Granted everyone loves that refund, but everyone also loves a little more money in every paycheck. With the new rules already possibly putting a little extra in there, altering your withholding could add a little more. Combined, maybe you could make some moves that you did not have the chance to a couple of months ago that you will feel better about in the long run rather than waiting for a refund in 14 months or so.
To ensure we don't make the folks at the IRS ornery, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.
Leave a Reply.