General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsI am asking a question of those who understand tax law a whole lot better than me...
The number of people who are going to have to pay taxes or get no tax return is going to jump by at least a million..that is middle class/blue collar (a lot of blue collar workers are definitely middle class) ..because they did not change their withholding.. if they did not change anything.. and supposedly we were all shifted to paying less taxes.. would not that mean, people actually should be getting a higher return, because they have less tax to pay on their earnings... I mean I can understand it if someone lowers their withholding..but if they made no changes at all.. this makes no sense..
Taxes are not my forte.. needless to say.. thank GOD my better half is good with that stuff..but he could nt give me an answer either
Dennis Donovan
(18,770 posts)...but I'm trying to buttress myself against bed news due to an emotional disorder against stress. I don't even want to know at this point.
Peacetrain
(22,877 posts)that the republicans are running on TV..there may be a logical answer..but I think we are getting a much bigger shaft than even losing the supposed tax cut after 5 years...while the uber wealthy and their corporations get to keep their cuts..
You and I are paying taxes for those highways outside our doors,( example) that the ubers are running their trucks up and down and we have to pay for that too.?? as you can see tax season is not good time for me.. I believe in paying taxes.. but I believe we ALL have to pay our share..
Dennis Donovan
(18,770 posts)...expecting to be a musician with unequalled talent.
Now, I'm a software engineer who can't return to work because of an anxiety disorder. Yeah, sounds like bullshit until you spend a moment in my shoes. My projects are stunted due to my absence. I'm trying to figure my way out of this. But, I'm losing...
Peacetrain
(22,877 posts)The more I read in this thread.. the more I realize what terrible lie this has been for most of us.. and the top 1/2 % are taking the food right out of our mouths literally... just awful
rgbecker
(4,831 posts)When the new law started, most likely most employers changed the amount withheld based on the supposed lower tax rate as they were "told" to by the IRS charts. Lower tax rate = withhold less. The people being killed by this new set up are the ones who used to take deductions. That and apparently Trump's guys at the IRS who wanted people to "feel" the tax cut right away were too happy to reduce the withholding amount. Now it's time to pay the piper.
Peacetrain
(22,877 posts)I am long retired.. and we always took less out of our check.. because we needed the money from week to week and so our tax returns were always way small...
uponit7771
(90,339 posts)pwb
(11,270 posts)I changed nothing and Paid 200 dollars more in taxes.
Response to pwb (Reply #5)
NCChomskyan This message was self-deleted by its author.
Nictuku
(3,613 posts)... I claim 0 so that I do get a refund each year. I depend on it. I also have mortgage interest deductions, so I had to do itemized deductions.
I had a slight increase in pay (about 480/year), but I ended up getting 1300 less in tax refund this year.
Grrrr!!!!! I needed that $$.
uponit7771
(90,339 posts)MineralMan
(146,309 posts)like you got a tax cut. It showed up as a little bit more in your paycheck. Trouble was that it didn't translate well to the end of year tax preparation. People who itemized deductions in earlier years didn't fit the withholding tables as well. So, they end up not having enough withheld under the new tax laws. No refund or maybe they have to write a check to cover the difference.
It was important for Trump to show that there was some sort of tax cut. Now, a bunch of people are going to discover that, for them, there was no tax cut at all. In fact, their taxes went up a little. They're going to be pissed.
Trump's plan is backfiring in April. For some, of course, it all works out OK. If they always took the standard deduction, they may actually see a tax cut. For the upper middle class folks who normally itemize, though, no such luck.
uponit7771
(90,339 posts)... will get bit hard seeing the deductions aren't there any longer.
It's still the middle class
I talked to a guy in North Chi about this and win I asked about who raised his taxes he responds with "I know ... I know"
It'll hit him again when the bill comes around
Cosmocat
(14,564 posts)hoping to keep control of congress at the time they passed the bill ...
MineralMan
(146,309 posts)Now, it's about to catch up with them. Too bad...
dixiegrrrrl
(60,010 posts)Been reading some comments from the ones who had reality land on their heads, showing they have not grasped the finer points of exemptions.
Basically, the rant goes like this: " I was a Trump voter and now I have to pay 1600.00 more this year. Curses on Trump and the idiots that caused this".
Overlooking, of course, his role in the whole mess.
ProfessorGAC
(65,042 posts)This was covered here on DU several months ago when the withholding tables were released.
Personal example. Recently retired, I told the pension plan management firm to go zero exemptions
They unfortunately assumed the pension to be 100% of anticipated earnings.
So, they withheld 12.2%.
That said, the actual taxes, after standard deduction would be 14.1% of total.
So if this was a paycheck, it would look like I was getting a 3% cut when it would really only be fifth of that.
My other income sources allowed me to assign a fixed percentage withholding. So we have to pretend the pension amount is lower than the actual value to avoid tax surprises.
Smoke & mirrors for the middle class!
theboss
(10,491 posts)Those are the people getting hammered this year.
MineralMan
(146,309 posts)There are more such families than many realize, and most are living without a lot of reserves, too. Like most of us, they're spending right up to their income. Personally, I think that's foolish, but I'm not them.
Moral Compass
(1,521 posts)What were seeing is the result of the sleight of hand that was the tax reform bill. There were some things shifted around in the part of the bill that was likely to impact the 99%, but overall when outright elimination of some deductions and limiting others meant that, in general, most people wouldnt see much of a difference.
The high earners and corporations and those deriving their income from capital gains saw dramatic rate reductions. Middle and upper middle didnt see much at all. The actual poor, who used to be exempted from any taxation and would see all their withholding returned to them year after year now might not get it all back so are seeing a tax increase.
So, how do you make it look like people are getting a tax cut when they are not getting one?
Mess with how much is withheld from peoples checks. Then from the time the tax reform went into effect and now those who werent paying attention (almost everyone) are seeing that theyve been under withheld and therefore they are either getting a smaller refund or actually owe.
I increased my withholding by claiming fewer deductions.
My wife actually submitted a new W4 specifying extra be withheld per check. Well see how well we guessed because it was just thata guess.
The Trump regime did little to try and see to it that good guidance was given to the masses since there was a very real intent to pull the wool over our eyes and sneak this bill past the CBO as almost revenue neutral.
This bill was a fraud. Just like the two that preceded it in 1986 and 2003. All the real benefits went to the highest incomes. Many in the lower tax brackets actually saw their tax rates go up due to loss of deductions and bracket compression moving those whose incomes had not changed to a higher bracket.
bottomofthehill
(8,329 posts)Your tax is set off of the money that you make. If you withhold too much you will get money back at the end of the year ( you have given the government an interest free loan). If you owe money at the end of the year, you are getting an interest free loan from the government. I usually pay between 1200 to 1500 at the end of the year in taxes.
ProfessorGAC
(65,042 posts)Interest on $ in that range is so low, what real value is derived by under withholding?
On the amount you describe the interest received would be around a buck
At an average over the year the benefit to you under your scenario would be 3% (taxable next year) or $15 pretax.
Seems like a lot of machinations for a buck and a quarter a month.
MineralMan
(146,309 posts)As freelance writers, my wife and I are always struggling with taxes. We rarely have money during the year for estimated tax payments, so we often skip them. Fortunately, the first quarter of our year is always a high-income quarter, so we have the money to pay what we owe, mostly self-employment tax (SS and Medicare.) Also fortunately, the higher standard deduction will ensure that we owe no income taxes for 2018. No refund, but we haven't had such a thing in years, anyhow. And then there are the years when we have to file an extension and come up with the money in October.
Such is life as a freelancer.
bottomofthehill
(8,329 posts)I use it as a bridge to ensure I am paying as little as possible in credit card interest which does add up.
ProfessorGAC
(65,042 posts)We have tiny balances on 10-12% cards, so still amount to much for us.
But, I get your point.
Even an average balance of 500 buck saves you a hundred!
theboss
(10,491 posts)You can adjust your withholding manually, but most people don't.
You probably did see an increase in your pay in either February or March of last year based on the recommendations by the IRS.
And I believe - but I'm not certain - that they were aggressive in reducing withholdings under the idea of "giving people back their money" or whatever.
So, your tax withholding may have been closer to what it should have been.
It would have been nice if they tried to educate the public on this.
Having said that, the loss of the personal deduction plus the loss of the SALT deduction is going to screw a very specific group of people. Families making $150K to $250K with two or three kids in too much house in the suburbs of pretty much every state.
I'm going out on a limb in thinking this is not a group that DU typically sheds a lot of tears for.
I just miss being in that group because I'm in too little house in the burbs. Because I won a rather unpleasant argument with my wife 5 years ago over the house we were going to buy.
safeinOhio
(32,683 posts)open a shell company to pay less like 1%? If not I will vote for those that legislate them away.
Peacetrain
(22,877 posts)I now know for sure how screwed over we all got... just moving the numbers around so they can steal from the rest of us to pad their coffers.. yes I am po'd
Srkdqltr
(6,290 posts)We are retired so we don't have the withholding.
The way I read all this is that the companies took less money in withholding and people thought they got a small raise.. then at the end of the year they pay more in taxes.
Shell game.
Are we surprised?
Squinch
(50,949 posts)no one discussed was that the personal exemption of $4150 went away.
In addition to the personal exemption, a lot of mortgage deductions, business expense deductions, state and local tax deductions and property tax deductions went away.
For myself, in exchange for the $1300 increase in the total of standard deduction and personal exemption, I have LOST about $10,000 in other deductions. I'll be paying thousands more this year.
MichMan
(11,931 posts)Married with no dependents. Haven't itemized any deductions for 10 years as they never came close to the standard deduction. My taxes went down approx. $2200 under the plan.