Millions of taxpayers may have to pay for 2018

The tax legislation passed late last year included many changes that will have significant impact across the United States. Of these, there is likely an increase in the number of Americans who will have to pay taxes in 2018. The Government Accountability Office (GAO) recently released a report warning that more than 4.5 million taxpayers will arrive next April, unless they act now to adjust their withholding taxes.

Indeed, the tax law has limited or even eliminated many detailed deductions claimed by millions of taxpayers, including nearly 28 million in 2017. The biggest contributors are the new limitations of national and local tax deductions (SALT deductions). restriction on the amount you can deduct mortgage interest and elimination of the deduction for employment expenses.

The people most likely to have to pay taxes for 2018 are those who detail the deductions. The GAO has looked closely at this group and has provided more clarity as to who it will include. Specifically, married taxpayers who detail the deductions, with two children under age 17, an income greater than $ 180,000 from one or more jobs and $ 20,000 or more in non-wage income (dividends, interest or capital gains) they rank next year.

The IRS recommends that taxpayers who detail should do a bit of planning now to avoid the shock of the big tax bill for 2018.

They are welcome to use the Retention Calculator on the IRS website to perform a "salary check" now. This free tool will ask you to enter the estimated values ​​of your income in 2018, the number of children you would claim, an estimate of your itemized deductions, and the amount of federal tax deducted from your last pay check. It only takes a few minutes – all you need is your last pay stub. But having your 2017 tax return handy can help speed up the process.

It is important to note that the calculator will not allow you to enter an amount greater than $ 10,000 as a deduction from local and local taxes that you have paid this year to reflect the new limit.

If your results indicate that you must pay taxes when you produce, you can now do several things to limit the damage.

You can save money every month on your tax bill, for example in a money market fund, which now yields about 2% interest.

You can increase the amount of tax withheld on your payroll for the rest of the year by revising your W-4 form. Generally, when you reduce the number of benefits you claim, your employer will withhold more federal income tax.

Also examine the portion of your income that is not withheld at source. This could be income from interest, dividends and capital gains. It could also be revenue from services such as Airbnb, Uber or Lyft. The more income you have, the more you will need to reduce the claims you claim on W-4 or more you will need to save to pay your future tax bill.

It is important to know what your current tax situation is because not having enough money could result in an unexpected tax or even a penalty when you file your 2018 return. By doing this check now, you will still have time to make the necessary adjustments.