Tax Season!!

[rayray]

I don't do my taxes till the last week of March to the first week of April due to a k-1 tax form being issued. So, I'm not sure how this year will be compared to Pre-Trump tax cut years.


Anyone here have an idea how it's changed your tax refund?

I have a few "Very Liberal" to "Far Left" friends talking about the middle class getting screwed yet again--I don't quite understand anyone far left complaining about taxes? Surprisingly, friends that tend to be moderate, conservative to indifferent are seeing an average of 3 to 3.5% in their favor with, of course, one friend said he's seen a 3.7% reduction in his refund--he's not happy.

Personally, I like larger paychecks hence I usually don't get large tax refund checks--I don't need the government holding my money to save it.

[ChadR]

Being a CPA, I can answer this with a vague answer. It depends.

I have one client that his is married with a fairly low paying job and 2 kids. His refund went up about 7%. It went up because of the increase of the child tax credit. If it was the exact same situation but without the kids, his refund wouldn't have changed at all.

I have one client that is a medical sales rep that has a ton of unreimbursed business miles. His tax liability went up about 8% because of the new tax law.

Clients that have profitable rentals and/or K-1s will do better under this new tax law.

Clients that have corporations that had profits of less than $100,000 are getting a big tax hike.

And of course the very wealthy and large profitable corporations are making out like bandits.

[fenders53]

Chad just answered your question on why your lefty friends doth protest. Tax rules are complicated, and somebody always wins and loses.

Yeah, our retirement ports benefited greatly. How about the widow I work with at HD? I'm just there trying to stay out of my IRAs for a few more years. She is working two jobs putting her son through college she didn't get to attend. Luckily for her the labor market is tight so she should get that $1.80 per day raise they promised her after a year.

BTW I am VERY right on most issues, but my eyes are WIDE open to hard working people less fortunate than myself. I got no time for people scamming the system. We all know plenty of them too.

Climbiing off soapbox now. rayray, at this time you can tell us why the corporations in my port that farm out 75% of their labor to China needed a huge tax break this year. Was there a recession I didn't notice? Did APPL, HD, AMZN, JNJ or BA need some kind of financial assistance?

[Otter]

I will actually get a refund this year, for the first time in about a decade. Kind of an anomaly, though. Bonus was paid in early 2018, subject to old withholding tables. So, the extra withholding has created the refund situation.

Using the latest calculator based on the current tax-law, present withholding amounts should have me back to sending the government a check in 2020.

[rayray]

http://www.usdebtclock.org/index.html

Interesting and scary tool at the same time--you can adjust the clock back to 1980 and forward to 2023, in addition, can also check out the state and world debt clocks.

Basically, almost every country has a spending issue.

[fenders53]

I didn't check your link yet, but FED spending is VERY alarming IMO. Basically a bunch of debt that nobody is ever actually going to pay back. It isn't going to end well. Consumer debt is going to be a problem as well when jobs get scarce, which they inevitably will at some point. Remember the mid 90's when the deficit for $4T and the sky was falling? It was a huge campaign issue. They corrected it for a year or two then right back to normal. I'm not so sure our economy wouldn't crash immediately if they went back to anything close to a balanced budget overnight. Everything is juiced with free money right now.

[Kerim]

SOOOO many changes for me this year. Notably, 2018 is the first year I'll file as single after getting divorced, it is the first year of the tax "cuts," and first year I'll be able to deduct a ton of alimony. Enough uncertainty for me that I had my tax person do an estimate a few months ago. The single status and new tax code are screwing me, but the alimony is such a giant deduction that more than offsets the increases. So I've over-withheld and should be looking at a solid refund. I think!

[Otter]

(01-26-2019, 11:24 AM)fenders53 Wrote: I didn't check your link yet, but FED spending is VERY alarming IMO.  Basically a bunch of debt that nobody is ever actually going to pay back.  It isn't going to end well.  Consumer debt is going to be a problem as well when jobs get scarce, which they inevitably will at some point.  Remember the mid 90's when the deficit for $4T and the sky was falling?  It was a huge campaign issue.  They corrected it for a year or two then right back to normal.  I'm not so sure our economy wouldn't crash immediately if they went back to anything close to a balanced budget overnight.  Everything is juiced with free money right now.

Adjusted for inflation, the debt is now roughly 3 times higher than it was in the mid 90s ($4 in 1995 dollars is $6.69 today). To me the key indicator is the debt/GDP ratio, which is now topping 100%. Deficit spending is fine, so long as the borrowed funds create a higher rate of return than the rate of investment (infrastructure investment comes to mind). Corporations with an EBITDA/Debt ratio of 1:1 carry investment-grade credit ratings all the time. The U.S. is also in a superior position to corporations, as it issues the global reserve currency in which its debt is denominated. Also, over time with population growth and inflation, the real value of presently-incurred debt diminishes. 

There is probably a point at which debt incurred reaches such high levels that the bond market goes crazy, but we don't appear to be anywhere near that point (especially if using other developed economies such as Japan as a guide). Frankly, if the U.S. were being judged by corporate standards, it would be viewed as foolish if it had not greatly expanded the debt during the past decade, during a period of prolonged economic expansion and historically low interest rates. 

Whether the borrowed funds were spent wisely is another matter . . .

[fenders53]

No argument with that, but I do have trust issues with the way it is spent. I think we spend too much on things that do not improve productivity, and grow our GDP. Entitlements come to mind of course. We have the strongest military on earth, and even if we weren't #1, I don't see #5 fighting off invaders. Our defense budget is at the wasteful level. I have 34yrs experience in government service so I won't even entertain a counter argument on this matter. We just gave corps a huge tax break (there, I'm back on topic lol). They bought back many billions of dollars in shares. Well good for us, but not so sure that enhanced the country so much. Yes it did create some jobs. That is inarguable. OK I'm rambling now.

[jdhansen]

Just finished filing my taxes and with the new tax cuts, the only change was my refund went down from $4,100 to $3,900.  I'm happy for the child credit changes, otherwise I would have been right at zero.  Going to really hurt as the kids start getting older, actually having to pay taxes. 

[chascornell]

This years refund/penalty has a lot to do with your withholdings. I have done a few people’s taxes this season and Chad is definitely right about the mileage! I think the new system will balance out more with about 50/50 get refunds/penalties, whereas in the past few years 75% or more of people got refunds. So yes, the government having less of our money throughout the year makes more sense for us, but people don’t understand why they aren’t getting a refund. One person who had historically gotten a mileage deduction ended up owing a substantial amount, so they decided to go with the standard deduction instead. It seems to me that the largest factor in affecting a return is the child tax credit and earned income credit.


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[fenders53]

Can someone explain how "they" can change the tax code, then hit you with a penalty for not adjusting your withholding that year? Am I missing something here?