21% of Taxpayers Will Be Underwithheld For 2018

Posted by Lee Reams Sr., BSME, EA on

The Government Accountability Office (GAO), in a report assessing the impact of the Tax Cuts and Jobs Act provisions and the withholding allowances established by the IRS, has estimated 21% of taxpayers will be underwithheld for 2018, up from 18% in 2017.

Underwithheld to the GAO means the taxpayer will owe tax when filing their return. For taxpayers who get less of a refund than they were expecting and who are accustomed to getting a substantial refund to pay property taxes, take a vacation, fund an IRA or just pay other expenses, being underwithheld could be a real financial hardship. 

The report also said that more documentation is needed regarding how the Treasury Department and the IRS updated withholding tables in the wake of tax reform. According to IRS officials, IRS did not document the process to update the withholding tables because it said it was a routine and straightforward process.