By now you’ve had enough time to get a good read on how the new tax laws have affected your paycheck. For most people, the news should be good. However, in many cases, it could actually be better.
The problem is many U.S. workers are actually withholding too much money. In other words, their take home pay could be even higher. On the plus side, if you like a big tax return each spring then this is the way to do it. In fact, according to Morgan Stanley, tax refunds are expected to be 26 percent higher in 2019. That equals about $62 billion total.
And that is mostly because people are withholding too much money from their paychecks. According to research, about 75 percent of all employees withhold too much to begin with. Research also shows that most taxpayers don’t adjust their withholding amount sufficiently when tax laws change.
The good news is taxpayers will have a lot more to spend in the spring of 2019. The bad news is they will be missing out on a lot of extra income throughout the rest of the year when they may need it. Plus, if it’s just extra money, then they could be missing out on investment opportunities or even extras saving for retirement, etc.
So, if you don’t want to wait till next spring to see some of that extra tax-break cash, then now is the time to review your withholdings.