The first tax season under the new federal tax law that passed last year might be leaving many Central New York taxpayers confused and paying more. Accountant Gary Grossman is a co-managing partner of Grossman St. Amour. He says his firm is one of many seeing more clients this year concerned they may miss something in the new laws. Grossman says even though the new rules may reduce an individual’s tax liability, they could still end up paying more.
“What many people are finding is if they did not modify the withholdings from their wages, that at the end of the year when they file their tax return, although their tax liability may be down, their withholding is down by even more. And therefore their refund is lower or the amount they owe is greater.”
Grossman says new limits on itemization have reduced the ability to deduct state income and real estate taxes. That’s led to more people choosing to use the standard deduction, especially in states like New York. He says taxpayers should begin to look ahead at changes they could make to help them save in 2019.
“If in fact you end up owing taxes, what you can do for 2019 is increase the amount you’re having withheld from your paycheck or start making quarterly estimated tax payments. That’s one way you can smooth the cash flow situation for 2019.”
Grossman also says projecting taxes before the end of the year can be helpful, as can estimating tax liability and looking at how to modify that liability. He also says that breaking down possible financial strains such as healthcare and housing is an important step towards improving your tax outcome.
Grossman says his accountants have been meeting weekly over the past year in hopes of mastering the new tax rules. Some of the new rules have yet to be clarified, keeping accountants on their toes.