New Report Says Under-withholding May Impact 30 Million Americans
GAO warns the TCJA could negatively impact many at tax time
More Americans will be writing a check to the IRS in April because their employers are not withholding enough from their paychecks following the new tax law, the Government Accountability Office (GAO) says in a new report.
Based on simulations run by the Treasury Department, the GAO says taxes for 30 million Americans — 21 percent of taxpayers — are being under-withheld by their employers, meaning they are getting a larger check this year, but will owe at tax time in April. According to the simulations, 73 percent of taxpayers will be over-withheld and receive a refund from the Internal Revenue Service.
When the simulation was run as if there had been no change in the tax law, 18 percent of taxpayers, or about 27 million, would have experienced under-withholding and 76 percent would have been over-withheld. In both scenarios, just 6 percent of taxpayers would have the correct amount of withholding.
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