Americans shocked by impact of new tax law
Many see smaller refunds, bigger tax bills
Wait, I owe the IRS?
The first tax filing season under the new federal tax law is proving to be surprising, confusing — and occasionally frightening — for some Americans, especially those accustomed to getting money back from the government.
Take Andy Kraft and Amy Elias of Portland. The couple had grown comfortable getting a small refund each year, a few hundred dollars or more. Then they found out they owe $10,160 this year.
“I will never forget the moment, I thought ‘We look good’ and then we added in the next W-2 and my jaw hit the floor,” Kraft said. “There was no way I wanted to believe that what I was looking at was accurate.”
President Donald Trump promised a reduction in taxes with the new law. And by most measures, the majority of Americans will see one. The nonpartisan Tax Policy Center projected the tax law would reduce individual income taxes by about $1,260 on average, although it benefits higher earners more.
So not everyone will see a massive tax bill or a drop in their refund. Some people already saw the benefit in the form of bigger paychecks. That’s because the law forced employers to change what they withheld. But the system is far from perfect, and many workers didn’t have enough in taxes set aside. Now, the IRS wants that money.