The Tax Cuts and Jobs Act of 2017 contained significant changes to standards and itemized deductions. As a result, some taxpayers, especially in high tax states, are finding that they owe a lot more in taxes this year. This is causing problems as they face unexpected tax bills.
One of the changes the Act made was limiting the State and Local Tax (SALT) deduction to $10,000 for married filing jointly. For over 11 million taxpayers, that translates into lost deductions of over $300 billion this year alone.
What can you do if you are facing a big tax bill, and have no way to pay immediately? First, you should look to make sure you have deducted everything that you can. There are new credits and deductions that may help offset the $10,000 limit. Second, pay as much as you can and file on time. Late filing or not filing will just make things worse - interest and penalties will pile up. Third, work out an installment payment agreement with the IRS. They are usually very reasonable if you ask for help first.
If you are facing an unexpected tax bill, we can help you navigate the situation.