While the majority of Americans are accustomed to receiving thousands of dollars on average back from the internal revenue service, this year the refunds on your tax return may really surprise you.
As the average person expects to receive about $3,000, according to GOBBankingRates.com, experts have repeatedly warned that the reality is that most taxpayers are running the risk of having tax payments under-withheld since new tax laws have allowed employers to use W-4 forms already on file to calculate withholding amounts.
This is extremely problematic because the law changed everything from personal exemptions to the standard deduction.
New Data from payroll processing giant ADP showed that the “vast majority” of people did not change their W-4 elections from 2017 to 2018. Which can ultimately result in smaller refunds for some, while others might even end up owing money.
According to a simulation conducted by the Government Accountability Office in August, which reviewed the revised federal tax withholding tables for 2018 implemented by the IRS and the Treasury Department, 21% of workers were at risk of having your taxes under withheld 3 million more than projections based on the old tax codes.
These unfortunate individuals will be stuck with a bill instead of a refund check, come April.
Only an estimated 6% of taxpayers are expected to have their wages accurately withheld, while 73% are likely to have their taxes overwithheld.
As of this past October, about 70% of Americans had not checked or updated their withholdings over the previous tax year, despite IRS warnings.
The “Tax Cuts and Jobs Act” gave the Treasury Department the authority to determine the withholding allowance structure because the old method was no longer suitable and there was not enough time to issue a new W-4.
The federal tax agency has already begun urging taxpayers to make sure they check their withholding rates for 2019.
