The culprit may be the Tax Cuts and Jobs Act (TCJA), which passed in 2017.
With taxmisinformationabounding online, it’s important to understand what really changed.
What is the Tax Cuts and Jobs Act?
The TCJA was the biggest tax code overhaul in 30 years.
One major change of the TCJA was an increase in the standard deduction.
This means fewer taxpayers now choose to itemize.
For many itemizers, losing these write-offs meant owing more to Uncle Sam.
Another hit came from lower withholding rates.
The IRS updated employers' withholding tables in early 2018 to align with the new tax rates and rules.
The TCJA also eliminated the individual mandate penalty for not having health insurance.
While repealing the fine gave taxpayers a break, it also messed with the subsidy calculations for Obamacare insurance.
Some subsidy recipients owed back a portion of the advanced premium tax credit received.
The law also nearly doubled the standard deduction and expanded the child tax credit.
So why is this law from 2017 in the news this year?
And now, we’re on year seven.
(I’ll let you draw your own conclusions about the politics involved.)
Progressives argue it benefited the wealthy and corporations the most.
Review your withholdings annually.
Check out theTax Withholding Estimatorfrom the IRS to effectively tailor how much income tax to withhold.
Work with a tax pro to understand how policy impacts your bottom line.
Empower yourself by learning how the code applies to you.