This tax season has been an eye-opener for filers. It marks the first time people are submitting their returns under the Tax Cuts and Jobs Act, an overhaul of the tax code that went into effect in 2018.
Major changes from the new law include a higher standard deduction ($12,000 for singles and $24,000 for married joint filers in 2018), the elimination of personal exemptions and new limits placed on itemized deductions, including a new $10,000 cap on state and local deductions.
The IRS and Treasury also released new withholding tables, which are the guidelines that your employer follows in order to deduct the appropriate amount of income tax from your paycheck.
As a result, some filers are grappling with some surprises after filing their 2018 returns, including smaller-than-expected tax refunds or levies owed from last year.
Smaller refunds aren’t necessarily a bad thing: It may mean that you kept more of your own cash instead of overpaying the IRS.
“It can feel nice to get a chunk of change, but that’s your money that you didn’t have throughout the year,” Smith said.
Source : CNBC
