If you owe Uncle Sam, say thanks to the new tax code.

4 minute read

Debt.com strives to provide our users with helpful information while remaining unbiased and truthful. We hold our sponsors and partners to the highest industry standards. Once vetted, those sponsors may compensate us for clicks and transactions that occur from a link within this page.

Each year, Americans eagerly await their tax refunds. This tax season, many are in for a rude awakening.

Tax filers are finding that effects from the Tax Cuts and Jobs Act aren’t what they expected. [1] After filing their returns, many have learned that they owe the IRS or are receiving smaller refunds than previous tax seasons.

Earlier this month, the IRS released a statement saying the average refund is down by 8 percent from last year. [2] You may be asking, why? Well, it doesn’t have anything to do with how much they earn. It’s more about how much of their earnings were withheld.

The law is the law, and there’s nothing you can do about it now. But you can still learn plenty to hack your taxes and max out your return this year. Here’s our roundup of expert advice for 2019…

How will the new tax law affect you?

In 2017, President Trump signed the Tax Cuts and Jobs Act, which cuts income tax rates, increases the standard deduction, and gets rid of personal exemptions. A lot has changed, but here are the four biggest factors…

1. Changes to withholding

If you work for a company, it’s likely it withholds income tax from your paycheck to pay out to the IRS in your name.

The Treasury Department made changes so that employers withhold a smaller amount of workers’ pay than previous years. The effect led to a small increase in their check every pay period – something the White House touted would give the average family “a $4,000 raise.” [3]

Taxpayers weren’t completely in the dark about, however, they may not have been paying attention. Last July, the General Accounting Office released a report warning taxpayers to adjust their withholdings at work or they may owe the IRS. [4]

It is still too early to determine how many Americans will owe this season. However, the G.O.A. does predict it will be more than 20 percent – roughly 30 million taxpayers. That’s an increase of 3 million who owe the IRS from 2017.

2. Changes to tax rates

The new law keeps the same seven tax brackets, but at reduced rates.

Tax Rates (2017)Tax Rates (2018)Taxable Income (Married)Taxable Income (Single)

Source: Tax Cuts and Jobs Act*

3. Increased standard deductions

Standard deductions almost doubled with the new act. That means married filers deduct $24,000 instead of $13,000 – and single filers deduct $12,000 – instead of $6,500, according to CNBC. [5] Heads of household deductions will be $18,000 instead of $9,550.

4. Eliminating some exemptions and penalties

 The act eliminates personal exemptions. In 2017, families could subtract $4,050 for each person they claimed, according to the IRS. [6] So families will be paying higher taxes this year.

Still, another change reduces the dollar amount on the taxes you owe: the Child Tax Credit increased. The credit is now $2,000 per child under 17, and $1,400 of that can be refunded, the act reports. [7] If your kid isn’t under 17 and is still a dependent, you can get a $500 nonrefundable credit.

Before the Tax Act, filers who didn’t have health insurance had to pay a penalty of 2.5 percent of their income. The act eliminates that penalty.

Are you behind on your taxes? Don’t worry we can help!

Learn More

Tips for filing taxes

If you dread filing your taxes, you’re not alone. In fact, 52 percent of Americans get stressed out around tax filing season, according to a 2018 TaxSlayer survey. [8] For detailed instructions, check out Debt.com’s how-to guide to filing your taxes.

But while you’re here, below are a few quick tips to reduce the pressure.

How to do your taxes for free

If you make $54,000 or less per year, have a disability, or speak limited English, you might qualify for free tax preparation through an IRS program called Volunteer Income Tax Assistance. [9] The only catch is you have to go in person, but you can search for an IRS-certified tax helper by zip code right here.

If your household income is below $66,000, you have the Free File option. [10] That means you can use name-brand tax software to file your taxes online for free. More than a dozen companies, including TurboTax, participate in Free File, although income and state restrictions vary. So, make sure to check that you meet the eligibility requirements for the free version or you could end up getting charged before you can finish filing.

If you’re over 60, you can get some free tax help from another IRS program called Tax Counseling for the Elderly. [11] Through TCE, organizations like AARP offer tax preparation and help with confusing tax questions. [12]

How do I know if I owe the IRS money?

Head over to the IRS withholding calculator to project exactly what you’ll owe during tax season 2019.

You’ll need the most recent paycheck stub for everyone on your return, and the tax return you completed the year prior to guiding you in estimating your deductions and credits. The final result even instructs you about how to fill out your Form W-4 for withholding. [13] Take that to your human resources department or fill out the form on your company payroll site, and you can avoid owing a big tax bill next year.

How to get a tax extension

 If you need more time to file your taxes, you can get a six-month extension to file your taxes.

It doesn’t get you off the hook for unpaid taxes, though. So if you owe Uncle Sam, you should pay what you can before Tax Day. (If you overpay, you’ll be able to mention that when you do file the paperwork, and you’ll get a refund.)

If you haven’t paid in full by the April 15 deadline, you’ll be hit with interest charges on the unpaid amount.

By this point, you know what you’re up against with tax season 2019. If your curious when you’ll get your money, check out Debt.com’s in-depth report Where’s My Tax Refund?

Cameren Boatner contributed to this report.

Did we provide the information you needed? If not let us know and we’ll improve this page.
Let us know if you liked the post. That’s the only way we can improve.

About the Author

Joe Pye

Joe Pye

Joe Pye began writing about debt and personal finance more than three years ago while attending Florida Atlantic Univerisity, where he served as Editor-in-Chief of the student-run newspaper, the University Press. Before graduating with a bachelor's degree in multimedia journalism, Pye placed as a finalist for the Mark of Excellence award by the Society of Professional Journalists Region 3 for feature writing and in-depth reporting. Since taking a full-time position as associate editor at Debt.com in 2018, Pye has become a certified debt management professional who's applied what he's learned to his personal life by paying down more than $22,000 worth of combined credit card, student loan, auto and tax debt in less than two years. He maintains a frugal and debt-free lifestyle. Pye's goal is to uncover trends in the financial world and share his experiences to help readers stay out of debt.

Published by Debt.com, LLC