Why Many Americans Are Shocked by Their Trump Tax Refund

[My Name is Url]

NowThis News
Published on 23 Apr 2019

The original title said Most Americans... But since I don't have all the pertinent data, I decided to change it to something a bit less editorial. Or was the original title editorial at all? Fell free to correct me if I've made a mistake.

[Doreen]

1. I knew this was what was going to happen

the moment he started vomiting tax cuts to his poor uneducated base.

I have only met four people who have done well or better this year and only one is poor (the poor one by only about $20-$30 more than last year. ) The rest of the people I have spoken to are getting either half, less than half, nothing, or owing.

What people were not told is that they should have refigured their monthly take out and increased it but there are to many people out there that do not understand that and ( no pun intended ) this administration was banking on that.

A vicious cycle for some is just starting. For some there is no way they are going to be able to pay and if by some miracle they are supposed to get money back next year it will go to the previous year's owed taxes. I am sure this administration will tighten the pay back rules a lot causing more financial pain for the people.

[forgotmylogin]

12. Also, there are people whose situations didn't change at all but they're paying now.

I lucked out because my tax return is simple and now live in the same state where I work. Even including the income from my last debt-settlement, I got some money back.

My best friend and his wife just bought a house and were royally pissed that they didn't get the deductions they were planning on. Went from getting $2000 to paying $2000. I feel so bad for people who unexpectedly had to cough up that kind of cash and don't have it on hand.

[CountAllVotes]

16. So right

I just realized that the people living across the way have sold their house.

They lived there for almost 15 years and could never afford upkeep on it.

I guess the final straw was no tax refund for this year.

There is one child in that household, a teenager.

The house was sold to them at during the height of the bubble in 2005.

They have lost a lot of money and now their home.

[CountAllVotes]

2. It amazes me

I know of more than one person that was expecting to receive a refund of some sort only to find out that they owe a couple of thousand dollars. I mean like *ouch*.

Most are plain angry as they should be but some of the garbage I've seen from dumpster supporters is so unbelievable such as this one here:

>>The tax issue was my fault. I did not realize they weren't taking out the necessary taxes. You've gotta pay it if you want to collect it at some point! haha!

Don't we all wish we could be so nonchalant about not getting that $3K you were expecting to receive?

Fools like this are a dime a dozen so to speak!

Sad the way they defend these horrific policies! They should be just as pissed!

& recommend.

[Laffy Kat]

10. "You have to pay if you want to collect." ???

Last edited Wed Apr 24, 2019, 12:39 PM - Edit history (1)

Are you kidding me?

[CountAllVotes]

15. The minds these people have

It is all about me me me me me all the way home.

And yes, you must pay pay pay to collect collect collect! Oh don't you know it. hahaaaaa indeed!

[Honeycombe8]

3. I wonder if it was because of the property tax cap.

The rates did go down just a tad. But the property tax deduction was capped for the first time. So if you live in a high property tax state, that could be to blame.

One of the women in that video said something about her property tax. So maybe that's it.

There are other caps, too. I think the requirements for deducting medical and maybe some other things became stricter.

[quakerboy]

4. Student loans

Anyone with student loans just took it in the shorts, as I understand it.

Among several other little things that really nailed middle income people who are used to counting on them.

But the big thing was the drop in withholdings.

[at140]

6. You are intelligent.. congrats

Because you are the rare person who understands why tax refunds are smaller for 2018.
It was less tax withheld in paychecks.

[Honeycombe8]

8. So the govt instructed the employers as to the wrong % to withhold?

They must have withheld a lot less than they should have, for people to end up owing thousands, on top of the thousands they were expecting as a refund.

[at140]

18. They withheld less to make Trump tax-cut look bigger

than it actually was. 85% of the tax-cut money went in to the pockets of top 10% earners. Small fry got just a bone thrown at them. That made it necessary to withhold smaller than normal amounts from the small fry's paychecks, so they would think they got a good tax-cut.

Regardless of everything, those who measure tax rates based on size of their refund are not financially very astute.

[Honeycombe8]

7. "Drop in withholdings"? Oh, you mean the amt the employer withheld from paycheck.

I don't understand how the employers got the withholding percentage wrong, and I hope they correct that.

One of those women in the video said the property tax thing hit her. That property tax cap is a direct hit to the middle class. The Repubs have been trying to eliminate it for years. Even though the wealthy have high property taxes, it doesn't hit them nearly as hard. For the middle class, the prop tax is often the biggest deduction they have.

I read that student loan interest is treated the same, and the max credit for it is the same as before.

[quakerboy]

9. They didnt make a mistake. they did as as they were instructed to do

The whole tax bill was a scam. The top got a tax cut. Trump gave himself a tidy tax cut.

The rest of us got little or nothing. But they specified smaller withholdings so that people would see a small increase in pay each month. So it would look like you got something.

[at140]

21. Nailed it quakerboy! .. nt

[Honeycombe8]

23. Even the lower earnings categories got a small tax cut, in the bracket rate.

It also doubled the standard deduction, to $12,000. But it did away with the personal exemption. That would give a net additional deduction of about $2,000 (not $6,000, like some thought).

So those two things combined DO amount to a tax cut.

So the difference is what the employer withheld wasn't enough and/or the itemized deductions that were newly restricted made a big difference to some people.

The biggest restricted itemized deduction is the property tax, capped at $10,000. There are others, I guess, that I'm not familiar with. I THINK there was something changed about earned income tax credit or daycare or something.

I wonder if the amount withheld was artificially low, to give people the false sense that the tax cut was bigger than it was.

[MichMan]

28. How many people with lower incomes had property taxes over $10K anyway ?

Most of them are renters.

[Honeycombe8]

33. True. The property tax cap hit upper middle class, or those in high-tax states.

Although....renters pay property tax indirectly, in that the property owners based rent amounts on cost to own the property, as well as the going rate for the market.

[quakerboy]

32. Why wonder?

"I wonder if the amount withheld was artificially low, to give people the false sense that the tax cut was bigger than it was."

I am under the impression that for several posts in a row, I was telling you this specific, exact thing is specifically, exactly what has happened, so your wondering about it really confuses me.

[Honeycombe8]

34. Look a the time of my posts.

Please be courteous.

I didn't read any post from you "explaining" to me what I had figured out by 4:00 this morning.

[aggiesal]

36. Your statement of ...

The biggest restricted itemized deduction is the property tax, capped at $10,000.

is partly correct.

We are capped at $10,000 for any combination of Property tax and State Income Withholding.
We are only allowed to claim $10,000 on either Property Taxes or State Income Withholding or both.

For examples, let's say my property taxes are $12,000 and my state income withholding's are $10,000
In 2017, I would have been allowed to claim deductions for both equaling $22,000 in deductions.

In 2018, I can only claim $10,000 period.
So I could either claim $10,000 of my Property Tax and not claim the additional $2,000 in property tax plus the $10,000 in state income withholding.
Or, I could claim all $10,000 in State income withholding and $0 in Property Taxes.
Or, I could claim $5,000 for each (totaling $10,000) and not claim $7,000 from Property Taxes or $5,000 from State income withholding.
In 2018, I would not be allowed to claim the additional $12,000 anyway you slice it.

Also, I had been warning this DU community that although the tax brackets had changed, the withholding's were not modified!
What we got, was basically an IRS 0% interest tax LOAN for the year, which the IRS is now requesting payment on that loan as of April 15th.

These are huge middle class tax deductions, plus the Mortgage interest deduction (where the repugs lowered the maximum from $1,000,000 to $750,000) are pretty much what allows us to afford the house we live in.
Removing or restricting any of these middle class tax deductions, will cause people to flood the market with homes they can no longer afford, which drive home prices down.

High property tax, income withholding tax or high home price, states that voted against Dolt45 (like CA, IL, NY, NJ, MA, ...)
are really feeling this squeeze in income.
I do not feel the least bit sorry about those that voted for Dolt45 or their Repug representative, they brought this on themselves,
but they are bring the rest of us down with them.

If you ever want to understand Repug politicians, all you have to understand, is that every bill they bring up for a vote, is designed to benefit the top earners! That's why I call the GOP, the Greedy One Percent.
They'll dress it up to make it appear that this is good for the Middle class, but in the end, it never is.

Unfortunately, it will continue to happen, and these people that they showed in the video, who voted for Dolt45, will continue to vote for anyone with an (R) next to their name on the ballot.

[Honeycombe8]

37. Yes. The Repubs have been after mortgage interest & prop tax deductions for YEARS...

the biggest tax deductions for the middle class.

I've since read that....

The goal for those tax cuts was to prevent the middle class from being able to itemize.

The reformed tax code will impact the residential home sale market, I think. If a person can't deduct the mortgage interest and property taxes fully, that will decrease the price of any home he can afford.

The home is the single biggest asset of most middle class Americans. I don't have to think hard about why a wealthy class wants to decrease the biggest single asset of the lower classes.

[forgotmylogin]

13. I think it was reported the admin did it on purpose.

They wanted people to see a "raise" in their paycheck, but they're paying it all back now.

[Honeycombe8]

24. I was beginning to wonder if that was the plan. If the withholding was intentionally too little.nt

[forgotmylogin]

29. Very similar to Dubya's $100-$200 check back in 2001.

W inherited a "surplus" (which may have been future projections from where Clinton left us) and immediately decided to "give taxpayers back some of their money!" We all got a check in the mail. "Yay! Free money!" but if I recall correctly it came out of tax withholding and we all had to pay it back - it was either deducted from a refund or added to a tax bill.

It wasn't egregious since it was only potentially a couple of hundred dollars which people were grateful for, but it was all political theater.

[Honeycombe8]

30. I remember the check.

It was a pittance, compared to what the wealthy people got. It was intended to pacify the common people, to distract them, while someone was picking our pockets.

I don't remember if it came out of the tax returns. That makes sense, though. I don't remember why we got it. I just remember getting the check, and I certainly welcomed it, like everyone else. But it was gimmicky.

I saw a couple of posts in a neighborhood FB group last year, by a couple of the alpha male Trumpers who bully other members, talking up the bigger paychecks. How great Trump is! This will help the economy so much...we're all getting more money! Proof that the tax cuts are NOT just for the rich. Etc. I hope they got hit on their returns, but I'll never know because I left that group, for obvious reasons. They took it over...impossible to keep politics out of the neighborhood group.

[at140]

19. Employers follow what the IRS instructs them!

Employers can get in trouble by not following guidelines for withholding taxes.

[sinkingfeeling]

11. Yep, my son could not deduct $6000 in student loan interest.

[at140]

20. That is totally unfair!

May be the $10,000 limit on SALT was the reason?

[sinkingfeeling]

25. Nope, student loan interest is not deductible.

[at140]

27. Very bad policy!

College education should be encouraged!

[Honeycombe8]

31. The student loan deduction is still there. $2,500 cap per return.

That was true before the tax cut bill, and after. It's treated as an adjustment to income, which was the way it was in 2017, too.

https://www.thebalance.com/student-loan-interest-deduction-3193022 :

The Federal Student Loan Interest Deduction
Interest Paid on Student Loans Is Still Tax Deductible

It was initially believed that this lucrative tax break for students would disappear effective 2018 with the passage of the Tax Cuts and Jobs Act (TCJA) at the end of 2017. An early version of the tax bill did indeed include a provision to do away with the student loan interest deduction. Fortunately, many congressmen listened when students, colleges, and universities protested in significant numbers.

The final version of the TCJA pulled the deduction back into the fold. It's still alive, well, and available in 2018.

You can deduct interest on student loans paid by you, or by your spouse if you file a joint return. You can't claim the student loan interest deduction if you file a separate married return. You must use the single, head of household, qualifying widow(er), or married filing jointly filing status to claim it, and you can't be claimed as a dependent on anyone else's tax return.
(SNIP)
The most student loan interest you can claim as a tax deduction is limited to $2,500 as of the 2018 tax year. This limit hasn't changed from the 2017 tax year.

The deduction is also limited by your income—it's reduced for taxpayers with modified adjusted gross incomes (MAGIs) in a certain phase-out range and it's eventually eliminated entirely if your MAGI is too high. See the chart below for the exact income limits that apply. They depend on your filing status.

The Student Loan Interest Deduction Phase-Outs
The phase-out ranges for the 2018 tax year are:

Filing Status Phase-out Begins Phase-out Ends
Married Filing Jointly 135,000 165,000
Qualifying Widow(er) 65,000 80,000
Head of Household 65,000 80,000
Single 65,000 80,000

Turbotax:

When to deduct student loan interest
The student loan interest deduction is taken as an adjustment when calculating your adjusted gross income, or AGI. This means you don't have to itemize your deductions to take it.

To qualify, the interest payments you make during the year must be on a student loan that you took out to put yourself, your dependents or spouse through school. If you're married filing separately, or for 2018 if your modified adjusted gross income, or MAGI, is $80,000 or more if filing single or $165,000 if married filing jointly, you can't deduct any student loan interest. Your MAGI is essentially your total income minus the other adjustments you take, except for the tuition, student loan and domestic production activities deductions.

When you use TurboTax to prepare and file your taxes, you don’t need to do any of these calculations on your own. We’ll ask you questions in plain English, handle all the calculations, and put all of your answers on the appropriate tax forms.

How much interest is deductible
If you're eligible to deduct student loan interest, TurboTax will put your information into Form 1040 to write it off. Have your 1098-E forms available when preparing your return to determine your total student loan interest paid. You can also add student loan interest payments you made that aren't reported on Form 1098-E to this total as long as the interest is paid on a qualified loan. Regardless of how much interest you paid, the maximum you can deduct is $2,500.

https://turbotax.intuit.com/tax-tips/college-and-education/what-is-a-1098-e-student-loan-interest/L8Tr1X9hD

[sinkingfeeling]

35. He prepared using TurboTax. I'll see what his return looks like.

[sinkingfeeling]

38. You were correct. He was able to deduct t $800 of $6000 in interest payments.

[Honeycombe8]

40. That's not much.

But I'm glad he got something.

Did you see that the original tax cut bill had this deduction removed entirely? They put it back in after complaints. But if they win the W.H. again, I bet they try to delete it in the future. They never give up.

[PoindexterOglethorpe]

5. I get so frustrated at such ignorance.

Personally, this past year I wound up paying several hundred dollars in state income tax, but got a couple of hundred dollars refund from the feds. But it honestly wasn't a problem.

I am lucky in over time (by which I mean the past 35 years or so) I've sometimes paid taxes, sometimes gotten a refund, sometimes needed to make quarterly payments, all because my personal income taxes have varied a great deal. Because of that experience, I'm no longer surprised when my taxes change.

But most people are used to a normal thing. They have money withheld, and when they file they get a bunch of money back. I understand why they didn't double check on the changes last year and are consequently blind sided by a much lower refund or needed to pay. It sucks. It really does.

So many people live on the edge. I've been there. I know what it's like. I wish I could counsel those people and help them understand and figure out what they need to do to make their lives work better. But I can't. I can only hope they figure it out for themselves.

But I will say that anyone who supported Trump fucking deserves it.

[dugog55]

14. The only way to really see

if you paid more taxes would be to fill out a 2017 1040 with your 2018 numbers. Then compare it to what the 2018 form taxed you. Taxable earnings would be the same for both forms, but the tax penalty may or may not be different when comparing the two. Most everyone got more money in their paycheck in 2018 to make it look like the tax cuts for the rich benefited everyone, but come tax time they may not have had enough withheld to warrant a refund.

I would think that people with high property taxes, mortgage interest, some student loans, and more than two children may have been stuck with a higher tax penalty. Other people claiming they got little or no refund just got it in their paycheck over the course of the year.

Either way, the great Trump Tax Cut bill was nothing but a giveaway to the already wealthy. There are reports corporations and wealthy donors are flooding the GOP with campaign funds to make sure the tax cuts stay in place. Also read that over 60 billion dollar companies have zero tax penalty and some are even receiving refunds after paying not taxes.

It will take a couple of years, but this tax cut is going to cripple the economy through higher taxes for the working class and cuts to every single program that enhances the lives of average Americans.

[CountAllVotes]

17. It is happening already!

See my post re: neighbors that have had to sell their home at a big loss (over 25%).

They are not rich, that is for sure.

WHO will be the next person that cannot afford to keep their home up that was expecting a good sized refund to do just that?

This is just the beginning, mark my words!

We seriously need to DUMP tRUMP as people are losing their homes NOW because no tax refund for some = no way to pay a mortgage on a home you bought 15 years ago and other outstanding debts!

Sickening situation at best!

[at140]

22. Good post! In my own case, I got a small tax-cut

compared to last year. Majority of my taxable income is social security and RMD from IRA.

[MichMan]

26. Mine went down considerably

Married with zero dependents and taking the standard deduction. Same exact income as the prior year, but ended up paying about $2700 less than last year. $1700 of it was in higher pay during the year and $1000 when I filed. Pretty happy with the way it turned out personally.

[KayF]

39. here's one

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