MONTGOMERY, AL (WSFA) - During tax season, sometimes you can look forward to a big refund check, but that might not be the case for thousands of taxpayers this year.
The IRS is encouraging people to check their weekly withholdings, to avoid an unexpected penalty tax. Lyvonnia Poppell, tax principal for Jackson Thornton in Montgomery, said it is a good idea.
"Nobody likes a surprise," Poppell said. "Nobody likes that phone call on April 10 that says, 'Hey, you're going to owe this much.' They'd rather go, 'Hey, you're getting a refund.'"
This comes after a President Trump's tax reform passed in December. Raphael Tulino, media relations for the IRS, said everybody could be affected by the new law.
A U.S. Government Accountability Office Report says 21 percent of taxpayers will under withhold their taxes this year.
That means this group will not have enough tax withheld, and could face an unexpected tax bill or penalty tax.
"Depending on your set of circumstances, you may find that you owe a little bit more, or for the first time when you haven't in a little while, or that you're due a bigger refund," Tulino said.
The IRS listed these groups of people who may not have enough withheld:
- Two-income families.
- People working two or more jobs or who only work for part of the year.
- People with children who claim credits such as the Child Tax Credit.
- People with older dependents, including children age 17 or older.
- People who itemized deductions in 2017.
- People with high incomes and more complex tax returns.
- People with large tax refunds or large tax bills for 2017.
But how do you know how much you will pay Uncle Sam? The IRS has an online withholding calculator. You can put in some basic information like how many jobs you have and how much you earn. The calculator tells you how much you might owe the IRS, or what your refund check will look like.
To adjust the amount withheld, you can fill out a W-4 and give it to your employer.
"The key is making those adjustments while you still have time to bring the taxes you pay closer to what you actually will owe, mainly in light of that new law," Tulino said.