AUSTIN (KXAN) — Monday is the last day to file your 2018 tax return or to ask for an extension, and you might not be getting back as much money as you thought.
Tax preparers at Austin-area Jackson Hewitt offices say as many as one in four people they see are having to pay extra for the first time this year or are seeing significantly lower tax refunds.
In a lot of cases, the difference is due to the Tax Cuts and Jobs Act the president signed into law at the end of 2017. Most of the changes went into effect in 2018, so this is the first tax season where they’re being felt.
The act adjusted how much money the federal government kept from each paycheck. That meant many employees had more money to spend throughout the year, but a smaller check to cash at tax time.
To get next year’s refund back to where it was, the simplest thing to do is to change your federal withholding percentage back to what it was in 2017.
“If you saw an increase in your paycheck by $30, $40, $50, the idea would be you would want to try to get it back to that same level,” said Gilbert Hernandez, general manager of Jackson Hewitt’s 16 Austin-area offices.
Form W-4 allows you to change your withholding amount for the rest of 2019, which can have a big impact on your next refund. Your employer’s payroll company — ADP is a popular one — might also have a way to adjust it online.
You can enter a specific percentage to withhold or simply look at your pay stubs from 2017 and 2018 to see how much your take-home changed.
“If you know your paycheck was adjusted by $25 and you saw more in every paycheck by that amount,” Hernandez said, “you could go in and say, just take out an additional $25 on my withholding, without even having to get into the percentages and things.”
The Internal Revenue Service reports as many as 50 million taxpayers hadn’t filed a return as of the end of last week. Filing for an extension gives you more time to get your paperwork together, but if you owe the IRS more money, you still have to pay by Monday’s deadline.