OILERMAN

The tax windfall that wasn't: A troubling new IRS report suggests many Americans may be giving money right back to the government

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4 minutes ago, ctm said:

They don't care as long as Trump appoints anti-abortion judges to the supreme court.  Unfortunately for them, Roberts screwed them last night in a Louisiana case.

What was the case? 

 

The strange part in this saga is the fact we had to bail out the banks or we would have hit a depression. We were losing somewhere around 750k jobs a month when Obama came in. This time around we just prostrated ourselves in front of the banks and big corporations when our economy was booming. It doesn’t make any sense. A tax cut that went straight to the middle class and small business would have been a great idea. Instead, from what I read the other day, around 60% is going directly to the top 1% of our country. Ridiculous. 

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2 hours ago, IsntLifeFunny said:

What was the case? 

 

The strange part in this saga is the fact we had to bail out the banks or we would have hit a depression. We were losing somewhere around 750k jobs a month when Obama came in. This time around we just prostrated ourselves in front of the banks and big corporations when our economy was booming. It doesn’t make any sense. A tax cut that went straight to the middle class and small business would have been a great idea. Instead, from what I read the other day, around 60% is going directly to the top 1% of our country. Ridiculous. 

It goes one step further.  Not only did republicans change the tax law but the IRS changed the withholding tables.  Trump tweeted at the time the law passed that people would start seeing a change in their paycheck on Feb 1st. Withholding went down so people saw a raise.  So even if the bill didn't reduce tax liability and was neutral for the individual, the change in the withholding would reduce a refund or increase the amount due in April.  The change in withholding was intended in part as a macro-economic stimulus....it put more money in people's pocket to spend.  Now the opposite is true.

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29 minutes ago, ctm said:

It goes one step further.  Not only did republicans change the tax law but the IRS changed the withholding tables.  Trump tweeted at the time the law passed that people would start seeing a change in their paycheck on Feb 1st. Withholding went down so people saw a raise.  So even if the bill didn't reduce tax liability and was neutral for the individual, the change in the withholding would reduce a refund or increase the amount due in April.  The change in withholding was intended in part as a macro-economic stimulus....it put more money in people's pocket to spend.  Now the opposite is true.

The revised withholding table should never  leave you paying at the end of the year unless you have other incomes or whoever is running payroll is setting it up improperly. (Likely one of the major problems). 

 

The elimination of the personal exemption is what’s likely hurting a lot of people. 

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1 hour ago, Cyrus said:

The revised withholding table should never  leave you paying at the end of the year unless you have other incomes or whoever is running payroll is setting it up improperly. (Likely one of the major problems). 

 

The elimination of the personal exemption is what’s likely hurting a lot of people. 

Companies go by guidelines set by the IRS each year on how much should be withheld.  IRS sent wrong guidance last year, and did not fix it until much later in the year.    There were numerous publication, in investment media, warning people about this last year, recommending that people check with their human resource departments to make sure enough was being withheld. 

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1 hour ago, 9 Nines said:

Companies go by guidelines set by the IRS each year on how much should be withheld.  IRS sent wrong guidance last year, and did not fix it until much later in the year.    There were numerous publication, in investment media, warning people about this last year, recommending that people check with their human resource departments to make sure enough was being withheld. 

Well the tax bill was rushed through, so I don't believe they had much time. I think revised tables went out in February/March? There's a few layers here. You can think the bill was a total sham, but that doesn't mean the IRS is playing politics and it also doesn't mean that whoever is running payroll is competent.

 

I can't find any reports of inaccurate tables (later in the year) that you speak of. Just numerous articles that employers may be withholding too little.

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1 hour ago, ChesterCopperpot1 said:

Either way both my wife and I claim 0 on our W-4, and we ended up owing thousands in a middle class tax bracket. No other income elsewhere. 

These types of issues happened before the tax change with two income families. It's likely the new tax law exacerbated it. I suspect that someone who is managing payroll made a mistake at one of the places you work. You can compare your W-2 to the IRS tables to figure out which employer is screwing up.

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2 hours ago, ctm said:

Which is more likely? Thousands and thousands of human resources departments across the country all screwed up their employees withholding?  Or, the IRS changed the tables and it affected millions nationwide?

Of course the IRS changed the tables. That's not up for debate. I'm guessing thousands and thousands of businesses didn't properly modify withholdings, or did so incorrectly after they were released.

 

Saying that your taxes went up and that your withholdings were off can both be true.

Edited by Cyrus

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3 minutes ago, Cyrus said:

Of course the IRS changed the tables. That's not up for debate. I'm guessing thousands and thousands of businesses didn't properly modify withholdings, or did so incorrectly after they were released.

Riiiiiiiiiiiiiiight

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3 minutes ago, OILERMAN said:

Riiiiiiiiiiiiiiight

I don't know if you've been a government employee all your life, but small businesses and even smaller corporations screw up payroll all the time.

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On 2/8/2019 at 6:12 PM, OILERMAN said:

It was widely reported the IRS changed the tables and it was widely reported this would happen. This isn't some secret. 

 

No, but that doesn't mean that everyone implements it properly.  I work for a large global conglomerate and our payroll people never seem to have an issue with any of this.  My wife works for a small company (500 people) and she fired her comptroller because he either didn't make the adjustments or did so incorrectly. 

 

On 2/6/2019 at 5:48 AM, OILERMAN said:

My taxes were pretty close to the same, we made 13k more overall than 2017, paid 1300 more overall in taxes and for 2017 I got a 2900 refund, this year I got slightly more than 2300 back. 

Our incomes rose by $6000 and our tax liability rose by less than $1000.  Itemized for 2017, standard deduction for 2018.

 

In the past we had refunds between $3000 and $5000, which is stupid so we adjusted our withholdings so that we'd have a refund of less than $500 or have to pay in as much as $500 at tax time.  We guesstimated this year that we'd hit that target with no withholding adjustments and were close - $650 refund.

 

Something that always amazes me is that some people judge their tax situation by the size of their refund (or lack thereof).  They have no idea how much they paid in income taxes, what their top marginal tax rate is, or what their effective tax rate is.

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11 hours ago, The Toddster said:

 

No, but that doesn't mean that everyone implements it properly. 

 

Something that always amazes me is that some people judge their tax situation by the size of their refund (or lack thereof).  They have no idea how much they paid in income taxes, what their top marginal tax rate is, or what their effective tax rate is.

This is likely why the withholdings were made to look like people got a tax break as opposed to less taxes. Yes the IRS recommended people check their withholdings because they might owe and it's pretty obvious most people would not do that. 

 

And when it comes to tax rates etc..... people are very uninformed. 

 

As for the refunds, I really don't try to mess with getting less of a refund, I aim to  pay less or defer the most I can, I've been around 3800-2300 in terms of a refund the last 10 year or so, mainly from maxing our 401ks 

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1 hour ago, OILERMAN said:

This is likely why the withholdings were made to look like people got a tax break as opposed to less taxes. Yes the IRS recommended people check their withholdings because they might owe and it's pretty obvious most people would not do that. 

If people are upset with having their taxes lowered, they need to have their heads examined.  

 



Quote

As for the refunds, I really don't try to mess with getting less of a refund I aim to get by not paying or deferring the most I can, I've been around 3800-2300 in terms of a refund the last 10 year or so, mainly from maxing our 401ks 

My wife wants a big refund for some reason, I want the money available to us each month.  

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