Many taxpayers have yet to adjust their withholding to compensate for the tax changes, Kollauf said, but “fewer are in that boat this year, as many had an awakening after filing 2018 returns.”
“Watch out for being under withheld on bonuses,” Richards added. “After the TCJA was enacted, supplemental wages such as bonuses are withheld at a flat rate of 22% if [they were] less than a million dollars. But if the taxpayer has income that put them into a higher bracket, they’ll owe the difference in tax.”
Taxpayers also forget to review capital gains and losses. “If in the 22% or higher federal bracket, consider tax-loss harvesting,” Mioli said. “Investors are able to offset gains and, to a certain extent, other income.”
You can harvest losses excess of your gains but are limited to $3,000 in losses in excess of gains; losses unused in 2019 can be carried forward indefinitely for federal tax purposes, he said.