LUBBOCK, TX (KCBD) - As Americans start to file their taxes, many are noticing a big difference in their returns. Because of recent tax law changes, many are reporting their refunds are less than they expected, and some filers say they now owe the IRS.
Michael Medina is the manager at Angela Hightower Income Tax Service, and explains the 2017 law that was the biggest tax overhaul in 30 years. “It’s called the Tax Cuts and Jobs Act, and it was a stimulus to where you it could boost your paycheck. You’d see higher amounts on your check. The downside of it if you take it from here, obviously you’re going to feel it at the end of the year on your tax refund.”
On average, refunds this year are 8.4 percent less than last year.
So, what can you do?
“If you go ahead and start filing your tax return, you can still contribute to an IRA that would help lower your tax liability,” said Medina, “We recommend people to put in as much as they can into their 401k if they have one at work. That’s going to lower your taxable income because all of that money is deferred until you withdraw it. Also, you can still contribute to an IRA up to $5,500, which will help lower your tax bill.”
And there are other changes that can impact your tax bill this year also:
Home owners can only deduct state, local and property tax up to $10,000. Moving expenses are no longer deductible, except for active-duty military. You can’t claim a child over 17 as a dependent and still claim the child tax credit.
But there are also some positives:
The child tax credit is $2,000 this year, double what it was before. You can deduct medical bills if they exceed 7.5 percent of your income. And families earning less than $66,000 can use a free filing program at IRS.gov.
That's also where you can find the withholding calculator to determine whether you're paying enough or not-enough in taxes this year.
The IRS says if you are due a refund, it issues 90 percent of refunds within 21 days of filings.
Medina said to review your 2019 withholdings with your employer and to review the information every quarter or every six months to make sure it’s up to date. “Definitely go back and review. Especially if you’ve already looked at your tax return and you see that it’s a whole lot different than it used to be and what you’re used to getting and you’re accustomed to. Definitely go back and change it now so that next year it doesn’t happen all over again.”