The IRS election-year quandary: When to boost Americans paychecks

[brooklynite]

Source: Politico

The IRS is facing its first big challenge implementing the new tax law: deciding how much in taxes to withhold from millions of Americans’ paychecks.

The agency is under pressure to take as little as possible so people will see big increases in their take-home pay ahead of this year’s midterm elections.

But that would come at a cost: smaller or even nonexistent refunds next year, though millions rely on them to plug holes in their family budgets. Democrats are already accusing the Trump administration of plotting "phantom windfalls" ahead of the November contest that will come back to haunt taxpayers next tax season.

“We oppose any attempts by the administration to systematically under-withhold income taxes during the 2018 tax year, knowing that in 2019 taxpayers may find they owe taxes when they were expecting a refund,” Sen. Ron Wyden and Rep. Richard Neal, the top Democrats on congressional tax committees, wrote to acting IRS Commissioner David Kautter.

Read more: https://www.politico.com/story/2018/01/10/tax-reform-paychecks-irs-332183

[turbinetree]

1. So for years the republicans have attacked the IRS and cut funding and saying that the agency is

politically motivated to help democrats when it comes to non profit associations classifications, and now they want to use the IRS to it's powers to give something now and then next year pay back what you got.........................and use it for a political means, FUCK YOU


The "scam tax law" was written to make some states feel the pain now, show the public how and what fat cat right wing hypocrite republicans are all about for those making less $75,000 and have no SALT deductions, see if you qualify for medical write-offs, show how this law by how Paul Ryan and Mitch McConnell is going to fuck people, except cretin's like him (Ryan) or Corker, the sexual predator, the Mercers, Koch's, Wells Fargo, defense department, oil companies, hedge funds, wall street bonuses, the list goes on and on....................

[pangaia]

2. Wait.. people rely on tax REFUNDS to plug holes?

Instead of plugging holes with the same money NOT taken out of their paychecks??

Would somebody pleas explain the difference to me?

[PatSeg]

3. When you are living paycheck to paycheck,

a tax refund can be like a little windfall every year. It is nice idea to believe that one could put aside small amounts of money in a saving account throughout the year, but when you are barely getting by, you are unlikely to do that. Though the tax refund is still your money, it can feel like something extra.

I suppose you have to know what really poor is like to understand.

[bullsnarfle]

6. Bingo.

I look at it as a mini-savings account and use the refund to pay my property taxes. That is a good chunk of change for my pay grade, something I probably would not have except by making it totally unavailable to myself in small drips until getting it back right at property tax due time.

[PatSeg]

9. That is how it was

for me more times than not. That yearly windfall often gave me hope when life seemed rather dreary and oppressive. It often came at the end of a harsh, unforgiving winter with spring on the horizon, contributing to a more positive outlook. There were times when there was very little to look forward to and this helped get me through it.

[loveandlight]

7. exactly

I live paycheck to paycheck. I try to save $50 each paycheck automatically into a savings account. But always end up taking it out eventually during the year for an emergency payment, car problems, illness, etc. But my income tax is money I know is coming to me in a lump sum right when I need it to pay my car insurance and such. It's a mind trick to me, I know but I would never have it as a lump sum if I didn't do it that way.

[PatSeg]

8. Yes

That is how it was for me many times over the years. There often was less coming in than going out, so the idea of putting money aside wasn't feasible.

Even though the tax refund WAS my money, it was something to look forward to each year and helped me out with bigger expenses like as you mentioned car insurance or a big purchase that I couldn't have afforded otherwise.

[pangaia]

14. Thanks for ..what can I call it.. a 'gentle rebuke?" :))

Once, I lived only for a few months collecting empty bottles for the refund back in the late 1960s. But, I was fortunate because I was pretty sure several months down the road there WOULD be a paycheck.

And another time, when I ran up so much debt that I couldn't/didn't pay my taxes for maybe 2-3-years. Had to do a deal with the IRS and NYS tax dept, and figure a way to pay off the credit cards..


I was lucky, but still.. it should be a reminder for me....

[PatSeg]

15. Oh, that's okay

It wasn't really meant to be a rebuke. I realize that sometimes we do forget what we've been through in the past, often because it is painful or uncomfortable, accompanied with the fear that it could happen again.

If nothing else, hard times have enhanced my empathy for others, as I truly know that, "there but for fortune go you or I".

[pangaia]

16. I DO always remember, perhaps not enough.

But, I should easily have put together my experience and the tax refund thing.. which I did not.

And I rather suspect oyu have plenty of empathy for others without needing any more "enhancement."

[PatSeg]

17. Thank you so much

I have been known to have empathy to an excessive degree at times. I'm always trying to maintain a balance.

Sometimes I remember, but forget to apply the experience or lessons to other people's lives and situations. It is often a conscious effort which can be accelerated by the memories of people who were insensitive or critical of me in the past.

[pangaia]

18. Beautifully said.

[Betty88]

19. I remember those days

We could not wait to file and get anything back, it was like second christmas.

[PatSeg]

20. Exactly

And sometimes made up for the financial setback of Christmas as well.

[haele]

11. If you don't make enough money to comfortably save...

You're not going to put much money aside - and you will always use it. No matter how "smart" or "fiscally conservative" you are. There's always emergencies that pop up, there's always annual expenditures that sneak up on you, there's always the "do I pay more on my student loan or car payment to get it down, or do I save the money this month?" question.

Heck, since October, I've had more income due to an employment category accretion at work, and had just started saving $200 a month to try and build a $10,000 "emergency/repair" fund, because I thought I wouldn't need to touch that money for a while.
I just pulled $500 out of that savings that I had sworn I wasn't going to touch - because we needed new tires and an alignment, and didn't have the "liquid fund" to pay for it this month out of what we had budgeted for immediate spending. Because along with the "slightly more expensive than budgeted" holiday expenses with family unexpectedly coming down, I also had to pay the property taxes due last month, and take a loan out to replace the 15 year old water heater that died, and they all pushed me over my budgeted "liquid" spending allowance for December by around $400. The
So now, I'm going to have to come up with the replacement funds as soon as possible, and I'm still dealing with an additional $200 a month having to replace the water heater went going out...
You should see my ledger - I project costs out two months now, just so nothing will sneak up on me.
Planning to "break even" on my Federal taxes might save me $100 a month, even with the munificent $20 a month "savings" I'll get under the Drumpf tax scam. And running the numbers, if the household made last year's budget - $20K a year less, we'd get a whopping $250 a month "savings". Wow, it will pay for the water heater, but with $20K a year less coming in, we still wouldn't be making enough to get off "paycheck to paycheck" and using a tax refund to pay off the big bills...

Which I understand all too well from experience:
See, before the ACA, there was this period of four years or so when both the state and federal tax returns would be used to pay off the few bills due to the medical emergencies that were occurring we couldn't pay that had gone into collections (and that's whether or not we were paying taxes).
That was when the kidlet was still under 17 and still deductible (and a hefty tax credit that would actually add to the return), and we had enough out of pocket medical expenses to be able to use itemization and deduct our entire state and federal tax bill.

I'd toss the $4K or so of Federal and State Tax refunds into our meager savings account, call up the collection agency, say "We have a chunk of money we can pay" - then negotiate with them to get $7K in collections that year down to $3750 or so. I'd never have been able to negotiate to pay that amount back month to month, even if I didn't pay any income tax at all - not from the hospital or medical providers, and not from the collection agencies.

It's pretty much the same reason Social Security and FICA taken out of your paycheck, to be able to cover the future without trying to deal with the responsibility of maintaining a retirement savings if you already live paycheck to paycheck, so that you won't be tempted to take out that money when something dire happens "right now" that will wipe you out and eventually make you homeless.
When you're making $35K a year joint, that $150 a month to pay FICA and SS can be budgeted and not hurt so much, especially when considering that putting that money in a 401K that makes about as much, but is limited to the amount you (and maybe your employer, if s/he's not a scumbag) can put in over time, and is subject to a shitty fee when it comes time to start withdrawing the money. $500K in a 401K, with 2% fees taken out of your money will probably not support you in your old age as long as the return on 40 years of Social Security and Medicare payments will.

It's sad that people use their tax refunds to pay for things they can put off they would otherwise risk savings and monthly budgets over.
But if your credit is shit and you're living paycheck to paycheck, that tax refund is often the only windfall that can help you get a car that works off Craig's List - or fix an existing car that's on it's last legs, or pay off that bill that's in collections, or bring down your outstanding student loan bills.

Haele

[pangaia]

13. Thank you for your detailed explanation of your situation.

I have never been in quite that drastic a situation for that length of time..

It is a good reminder that there was a period, quite a while actually, when I could not afford any health insurance and had to decide what 'NOT to pay this month..'

[getagrip_already]

4. they intend to weaponize EVERY agency....

They all exist for ensuring republican control.

Long live the king?

[liberal_patriot_md]

5. Its like this -

The tax plan went into effect this year. But most folks won’t see a difference until they file taxes next year.

The deductions from paychecks will be smaller so take home will be bigger. But that will make refunds smaller. Most people won’t notice a few dollars difference every other week - they do notice how big their refunds are.

The GOP is trying to balance immediate impact while ensuring folks recognize how much less they’re paying in taxes. They saw how Obama didn’t get any credit for lowering payroll taxes and want to avoid that.

[jmowreader]

10. This is going to bite Trump in the ass

If Mr. and Mrs. Middle Class we’re getting $900 back uncer Obama, and they have to pay $500 under Trump, they are going to go ballistic.

[jayfish]

12. They Don't Have The Withholding Tables Done Yet?

How may pay periods into the year are working people going to have to wait to get any benefit from this boondoggle?

[roamer65]

21. I am betting we wont see lower withholding.

They will probably continue current withholding and then refund next year.