Economy
Related: About this forumI owe how much? Americans shocked by impact of new tax law
Source: Associated Press
By SARAH SKIDMORE SELL
February 19, 2019
Wait, I owe the IRS?
The first tax filing season under the new federal tax law is proving to be surprising, confusing and occasionally frightening for some Americans, especially those accustomed to getting money back from the government.
Take Andy Kraft and Amy Elias of Portland, Oregon. The couple had grown comfortable getting a small refund each year, a few hundred dollars or more. Then they found out they owe $10,160 this year.
I will never forget the moment, I thought We look good and then we added in the next W-2 and my jaw hit the floor, Kraft said. There was no way I wanted to believe that what I was looking at was accurate.
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Some people already saw the benefit in the form of bigger paychecks. Thats because the law forced employers to change what they withheld. But the system is far from perfect, and many workers didnt have enough in taxes set aside. Now, the IRS wants that money.
In addition, the law also eliminated personal exemptions, increased child credits, limited popular deductions and generally upended many familiar practices that determine what happens at tax time. That has taxpayers feeling a bit unmoored.
-snip-
Read more: https://apnews.com/57ac6498374944f7bfb20660630c95f4
democratisphere
(17,235 posts)working for ya?!
Yo_Mama_Been_Loggin
(107,093 posts)Kind of like the Russian gals in that hotel room.
JayhawkSD
(3,163 posts)And in those bigger paychecks lies the hypocrisy of this whole hysteria over the "smaller refund" media firestorm. It is because the consumer had less money withheld from his paycheck, and therefor more money to spend, during the year that he had less refunded. So that smaller refund was probably not because he paid higher taxes. AP uses an example of a person who, instead of a refund, will owe some $10,000, but that is far outside the norm. The average refund this year over last year dropped by just 20% and a miniscule number went from refund to owing money.
AP says that "the law also eliminated personal exemptions," but doesn't say that it doubled the standard deduction which has been used historically by more than 95% of taxpayers. It says that it "increased child credits," but doesn't point out that that reduced taxes, not increased them.
AP says that the law "limited popular deductions," but doesn't point out that fewer than 10% of taxpayers itemized their taxes in the past and that with the larger standard deduction even fewer will this year, meaning that the limitation on these deductions is meaningless for all but a few taxpayers in the highest income brackets.
I'm not defending Trump. I'm a Democrat and I hate Trump. But I prefer logic, and I don't favor the attitude of "a lie becomes the truth if it destroys Trump."
at140
(6,110 posts)My income is mainly social security and a few dividends from mutual funds.
I am required to take money out of IRA every year because of age over 70.5
and that money is fully taxable income! It is not money coming in from outside,
it is simply a transfer from my IRS account to my checking account.
Point is I had nothing withheld from my paychecks, since I get no paychecks.
I just did my tax calculation and my tax is slightly lower this year compared to last year.
JayhawkSD
(3,163 posts)The hysteria about smaller refunds is invariably worded to imply that people are paying higher taxes. I have been pointing out that a smaller refund is not necessarily higher tax, but is more often than not a smaller tax with an even smaller withholding.
Thank you for confirming that your tax was, in fact, lowered by the "Trump tax cut."
Again, to head off the flamers, I am not a Trump supporter. I despise the man and everything that he stands for. I do, however prefer truth over dishonest hyperbole.
at140
(6,110 posts)There are more than enough facts resulting from Trump actions to see that the middle class is getting screwed and their assets are shifting to the top 1% richest. The tax cut for the top 1% was bigger by orders of magnitude than the middle class.
But there is no way to deny that MOST taxpayers in the middle class brackets got a small tax cut.
My both kids earning middle class wages received a tax cut. Truth is our best weapon.