Trump and the GOP Tax Plan Screwed Middle Class Parents Out of a Refund

[jpak]

https://www.yahoo.com/lifestyle/trump-gop-tax-plan-screwed-225652100.html

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I have, for the last three years enjoyed a refund. And the money I received from that refund often went back to my community. One year my wife and I bought a couch from a local business. The next we bought a bed from a local business. Other times, of course, we’ve used the refund to pay down debt. Either way, I am not expecting a refund this year. I’m expecting to write a check.

Here are some things I won’t be able to deduct on my tax bill this year: student loan interest, medical expenses, property taxes, and any home office expenses not paid by my company. Also, the threshold for charitable donations has increased so I can forget recouping the donations to Wounded Warriors, Habitat for Humanity, and PBS. Meanwhile -— and this is a true thing not a rhetorical point — if I owned a private plane I could deduct the maintenance of the aircraft.

Republican lawmakers are pointing out that workers have already pocketed the equivalent of their refund due to increases in their paychecks, a byproduct of the corporate tax rate getting lowered. Paul Ryan was particularly chuffed about this fact. Remember when he boasted about the school secretary receiving her $1.50 weekly raise because of the tax law? “She said that will more than cover her Costco membership for a year,” Ryan tweeted.

https://s.yimg.com/ny/api/res/1.2/1vWlMhuo298O_Qv0a_sqRA--~A/YXBwaWQ9aGlnaGxhbmRlcjtzbT0xO3c9MTI4MDtoPTk2MA--/?q=65&enable=upscale&w=600

But that’s a specious claim. I earned my raise. (Editor’s Note: Yep.) And I don’t have any particular reason to believe things would have gone differently if the corporate tax was higher. And I work at a small company. There’s no way most workers at larger companies will ever know if they benefited from the corporate tax cut. But what they should know is that the government pulled in a lot less revenue, which is why Trump’s big fun parental leave proposal is probably DOA and why the government will continue to do so incredibly little to help parents even as childcare costs skyrocket. But there’s still a Social Security tax cap that ensures the uber-rich save $62,000 on every million dollars in salary they bring home. Cold comfort to me, as I pay a mortgage on my house, which also serves as my office.

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[PubliusEnigma]

1. The #TrumpTaxRipoff cost my family $4000 real dollars this year. I am not alone.

I predict that people will be handing out torches by the end of April.

And it will only get worse in the years to come since the most costly changes to the tax code are delayed.

The GOP really fucked us all over.

[JenniferJuniper]

2. Over 2k here

I didn't change my withholding amount deliberately so I could compare. My usual 2700 refund is a little over $400 this year. For me its because of the limited tax deductions. The Republican attack on blue states, and it's going to get worse over the coming years.

[JayhawkSD]

7. You didn't but your employer did.

New withholding rates went into effect using existing W-4 that you filed. Withholding based on same exemptions was lower. Your comparison is not valid, and you got the result that one would expect. Less tax was withheld, and so your refund was smaller.

Look at box 37 on your form, "Adjusted gross income," and box 44, "Tax." Divide the amount in box 44 by the amount in box 37. That is the effective tax rate you paid. Do that for the year 2017, and again for 2018 and tell us how much higher 2018 was.

[Iliyah]

3. Democrats tried to warn the public but

alas, GOP's base knew Democrats were wrong (because they have been conditioned to believe so) and the GOP's are always right. Facts did not matter back then now slowly reality is starting to kick in (too late tho).

[dalton99a]

4. Just heard on AM radio: "Your taxes are going up because of Nancy Pelosi!"

[JayhawkSD]

5. You had less tax withheld during the year.

Almost no one paid higher taxes in 2018. The standard deduction and personal exemptions were raised sufficiently to more than offset the loss of deductions for all but a miniscule percentage of taxpayers. In previous years 90% of homeowners with mortgages did not deduct home mortgage interest because it was the only deduction they had and was smaller than the standard deduction. With the increase of the standard deduction that figure increased to something on the order of 99%.

The IRS issued new withholding tables in February 2018, and employers began using them as soon as they were received. No action was required by the employee. The new withholding was in effect based on the previous W-4. Deductions from the paycheck were lower.

You paid less tax during the year in the form of deductions from your paycheck, and so you have a smaller refund at the end of the year. Overall, in almost all cases, you paid a bit smaller tax rate for the year, not larger.

Getting a big refund is not smart in any case. It means you are allowing the government to have your money for almost an entire year and not pay you interest on it. You should refile your W-4 every year to adjust your deduction so that you get no refund, or a very small refund. If you want a big check every April, put money in a bank every payday so that when you take it out in April you will have been paid interest on it.

And there's no point in flaming me as a Trump monkey. I'm not. I despise Trump. I have a brain and am able to use it to think logically.

[beachbum bob]

10. I dare say you are 100% WRONG

people are paying MORE federal taxes, my cousin is paying THOUSANDS MORE as new taxcut changes to property tax and state income tax limit was 1/2 of what it was for him in previous years the loss of personal exemptions as he has 4 kids wasn't made up at all with the increase in the standard deduction...may not be a trump monkey just ignorant

https://www.cbsnews.com/news/9-tax-deductions-individuals-can-no-longer-claim-for-their-2018-taxes/

[still_one]

12. Absolutely Bob, and those most adversely impacted by this would be middle class, who itemized their

deductions in 2017, and are not able to do it in 2018 because of the changes you mentioned.

It is very simple to demonstrate that also. Just put in the same numbers one used for 2017 into 2018, and it will show you how much more or less the tax liability is.


The elimination of the Personal Exemption is what is going to adversely affect most people who used to itemize deductions and can't now.

[still_one]

11. That is not correct.

1 They eliminated the Personal Exemption for everyone. While they increased the standard deduction to 12K for single, and 24K for married, eliminating the Personal Exemption essentially decreases that deduction:

For Single: 12000 - 4050 = 7950
For Married: 24000- 8100 = 15900

This will impact adversely those who itemized deductions in 2017, and live in high property tax and SIT tax.

2. They put a CAP on Property Tax Plus SIT for those that itemize deductions. Those that live in states that with high property tax and SIT are limited to a 10K deduction. In states like California that could amount to a loss of at least a 1000 dollars or more in deductions.


3. They eliminated the interest rate for equity lines of credit, unless it is used for Home Improvement. (Better have those receipts to prove that). Using equity lines of credit for anything else, including college, medical expenses are not allowed to deduct the interest for those equity loans. Another loss of several thousand dollars for those impacted.

4. Because of those limits and eliminations to the deductions listed above, those who itemized the charitable contribution in 2017, will find that those charitable contributions won't be enough to exceed the new standard deduction, and with the loss of the personal exemption will find they are paying more tax then they did in 2017.

This will impact about 30% of those who itemized deductions in 2017. That is not an insignificant number of people, and those people in that group who itemized deductions would be classified as middle class.

https://www.fool.com/retirement/2017/03/12/the-average-americans-tax-deductions-by-income.aspx

[janx]

13. Yeah, some people are going to be very angry.

Link to tweet

[still_one]

18. As I said before I wouldn't mind paying the extra tax liability if the money was going to provide

adequate healthcare for all, protecting the environment, actually creating jobs instead of assuming that trickle down economics, which was a failure, would supply the jobs, civil rights, protecting social security, medicare, Medicaid, etc. etc. etc.

and of course not wasting it on a stupid wall and the like

[Drahthaardogs]

16. Bullshit.

My itemized deductions far exceeded the standard deduction. Lots of us living in high taxed states are like this. Trump did this on purpose to punish the coastal states. However, Alaska, Nebraska, and some other high taxed red States will get hit too.

[PubliusEnigma]

17. You are incorrect. I paid more because of the changes, and so did thousands of others.

This is going to bite Trump in the ass.

[smirkymonkey]

6. Surprise!

Did anyone really think that he would do anything to benefit the poor and the middle class?

We knew he was full of shit, but his fan club must be getting the shock of their lives right about now.

[dalton99a]

8. .

https://www.democraticunderground.com/100211798004

[marybourg]

9. The amount of your refund is just a measure

of how much you had *over withheld*, that is, how much of an interest free loan you gave the government. It will be a combination of your input on your withholding form and your employer’s calculations based on guidance from the IRS. It’s not a measure of how much you actually paid in income tax.

How much you actually paid will be the result shown on your tax return as “Income Tax”. Much as I detest the tRump tax scam, your refund has only a sketchy relation to whether your actual tax is higher or lower.

[janx]

14. Yes, but it is a shell game.

A few extra bucks in your paycheck doesn't make much of a difference if you are used to seeing at several hundred come back at tax time and don't receive that.

I'm one of those people who has the max tax withheld since I am terrified of getting into trouble with the IRS and don't make enough to risk owing them anything.

[marybourg]

19. It would make a difference if

you took the amount of your refund, divided it by the number of paychecks you receive, and fill out your W4 to withhold approximately that much less each paycheck. Then take that new overage (and maybe even a coupla bucks more for good luck)and tuck them into a bank account. By the next April, you’ll have your own “refund”, a few bucks more and a few buck of interest. And you won’t have been giving tRump an interest free loan, and maybe it’ll even be the start of an interest in saving, eventually investing, eventually being financially independent and savy.

Your terror of the IRS is misplaced. If you owe less than $1000 due to UNDER withholding, no penalty is charged. If you’ve had withheld 90% ( this year 85%) of what your total tax was last year there no penalty. There’s absolutely nothing wrong with owing them something at tax time. You’ll have gotten the interest on the money, instead of them. And they won’t be sending a SWAT team for you. It’s legal and legitimate.

[janx]

20. I'm not hurt by it--at least not so far.

Not much changed for me. A few bucks more per paycheck, a few less on the small refund. That's why I call it a shell game.

And--I have owed the IRS before. Yes, I did not have a SWAT team after me, but it wasn't pleasant.

[Drahthaardogs]

15. Basically, if you have a mortgage and relatively high property taxes

You're getting a fucking and they aren't even using some Vaseline!

Work from home? Do you use a home office deduction? Ha! Jokes on you!

Are you in sales and use your own car? Pizza delivery even? Fucked.

Tell everyone who thought a billionaire was looking out for the little guy how guillable they were. Ask them if they want to tatoo SUCKER on their forehead.

I rub salt in their wounds. They only understand pain and brute Force anyway.

[Coventina]

21. Don't forget that there are also "Underpayment penalties"

Meaning, in addition to paying an amount you owe, there can be a fine in addition to that.

This happened to my husband and me one year.

I think it is probably going to happen to a lot of people this year.

Sadly, they will blame the IRS, and not Trump and Paul Ryan, et. al.

[Achilleaze]

22. URGENT message to taxpayers from republican Draft-Dodger-in-Chief

[JayhawkSD]

23. What was your "effective tax rate" in 2017 and 2018

Forget all the circular discussion about refunds and withholding and deductions and whatnot. All of those things are just different routes for getting to the same place. What was the effective tax rate that you paid on your income?

Most of the arguments do not convince me. I live in California, which is a very high tax state. Income over $160,000 per year and own a house appraised at over $500,000. State and local taxes (income tax, property tax, and personal property tax) last year $7800 which means they are still fully deductible. Total itemized deductions just under $17,000, which means I will do better this year with the $24,000 standard deduction anyway. None of which matters, because the bottom line will be revealed by the "effective tax rate" that I pay.

Look for a line that says "Adjusted gross income." On the 2017 return it's line 37. Write down that number.
Look for the line that reads "Tax." On the 2017 return it's line 63. Write down that number.
Divide the number on line 63 by the number on line 37. That is the "effective tax rate" that you paid in 2017.

Now do the same thing for your 2018 return and compare the rate to what you had for 2017.

It does not matter what the method was that determined those rates. Whether it was standard deduction, or itemized deductions, or states taxes were deducted, or you got credit for supporting your Aunt Sally is irrelevant. If the effective tax rate is higher in 2018 then you paid more tax. If it is lower then you paid less tax.