What’s amazing is that this is the result with the temporary middle-class tax cut in place. The tax cuts for corporations and wealthy inheritors are permanent, and the middle-class tax cuts are just the sugar used to make the, uh, “medicine” go down easier.
I think the real question is less how much refunds are being issued and more of how many people owe a significant amount after their withholdings.
I understand why the phsycologial reason of why people like getting refunds but in reality the best case scenario is receiving $0 and owing $0 come tax time. Getting a refund just means you were not getting all the money you should have been each paycheck.
If the withholding amounts now correctly predict your tax liability then not receiving a refund is a good thing, and still might end up being a tax cut for the person (which is a separate concern). Having the people angry is good for getting change but I have a feeling people are looking too closely at the refund/payment and less on the actual tax liability amount in the conversation.
A lot of people use their withholding as a kind of forced savings plan. It may not be smart to do that, but a lot of people do it nonetheless, and they are incredibly dependent on the ‘windfall’ that is their refund.
I have to admit I’ve thought about it in this way before.
It’s more that I’m a millennial dummy who doesn’t completely understand taxes. I DEFINITELY don’t want to owe any though, so I’m okay over-withholding to make sure that doesn’t happen. If it results in a refund, that’s just gravy.
We actually wound up in a really good spot this year, almost entirely due to the adoption credit. Between that and our meager deductions (student loan interest, mortgage interest, etc) we completely wiped out anything we owed, which resulted in the fattest refund I’ve ever seen. It’s all going toward paying off said adoption, but still.
The real negative to this strategy is that you’re foregoing any interest on the money you’re saving. Better to put it into the bank than let the government hold it. But of course that’s much harder to do from a discipline perspective.
These days I’ve gotten into the habit of automatically using my refund to pay against next year’s taxes, so I’m no better. That could be my money in my bank account!
I think a lot of people are okay missing out on the 3 cents it would have generated over the course of the year, honestly. :)
Yes, of course.
Honestly I’m fine if a decent chunk of Trump supporters think they’re paying more taxes all of a sudden, even if it’s more complicated than that. The SALT cap is painful enough for those of us in the targeted blue states.
I mean… they are if they’re paying in when they didn’t or are getting less back than usual.
If you give me $100 and I give you $50 back and then next time I give you $40 back… you’re paying more.
Right, but even if some are completely evening out, yet think they’re worse off because their refund is lower, I’m fine with that. The easier it is to undo the tax changes, the better.
Families are getting hammered in Utah. I don’t think anything will push this state to stop voting Republican, but I am curious what kind of blowback there is going to be.
Co-worker mentioned getting $1700 less in refunds this year. They are not happy.
I haven’t even started any paperwork yet.
I’m a bit nervous. We’ll see how it shakes out when my W-2 shows up.
My sister got $1000 back last year and owes $3000 this year. No significant change to her earnings or status.
I am getting a small refund for Federal and owe a lot more in State (Vermont). This is actually a bit better than where we were in 2017, but it’s hard to tell because we bought and sold a home last year.
The numbers I’d like to see are the median tax refunds.
With current interests rates it is probably wiser for most people to get a lump sum amount rather than a small weekly amount they would fritter away.
I believe I saw that they were $2,300 last year and this year around $1,800.
Did my taxes over the weekend (using H&R Block software) with extreme trepidation given all the news recently. While both my wife and I received small pay increases last year, we have our withholdings set pretty high, and I actually have a little extra withheld from every check to cover the deficit we would otherwise incur if I did not. This has worked out in previous years to get us pretty close to $0 owed/refunded…though last year we actually got back $660, the largest refund we’d seen in years.
So this year, punching numbers into the software, I’d entered all of our income and all of our deductions, and thanks to the changes in what’s allowable as deductions and caps on some things (state and local taxes, mortgage interest and real estate taxes, etc.) we were looking mildly screwed to the tune of owing $850. Not a staggering amount, but enough to piss me off given how careful I am to avoid such a tax bill. Remember, I set aside EXTRA every pay check in withholding, so this wasn’t just a case of not factoring in the paltry per-paycheck “increase” Trump’s TCJA supposedly gave everyone. This swing from $660 refunded to $850 owed was all about the credits and deductions taken away from me, a middle class taxpayer, by Trumps TCJA. Urge to kill…rising!
But I wasn’t quite done yet. This year I received a Form 1098-T from my son’s college. Turns out you can use this form to claim the American Opportunity Credit, a tax reduction including refund of up to $2,500 if the child you are paying tuition for (or you if you’re paying your own tuition) is in their first 4 years of post-secondary education, enrolled in a degree program at a qualified school, taking classes on at least a half-time basis, and the person claiming the credit has an AGI the meets certain requirements, doubled if married-filing jointly (which I am). The credit reduces in amount if your AGI is higher than the cutoff, and you are ineligible altogether if your AGI is beyond a certain point ($90K/$180K single/joint I believe). Being eligible for this credit flipped my $850 owed to a refund of over $1000.
I never thought having a kid in college would actually SAVE me money somehow…but there it is. Best part is who I have to thank for this largesse that saved my bacon, as the American Opportunity Credit is part of the American Recovery and Reinvestment Act passed in 2009. THANKS OBAMA!!!
Yeah, Obama did good stuff.
Obama plain saved our bacon economically, despite the GOP obstruction. Dude should be legend. Now, his foreign policy could have been better, but he did ok even there, given the playing field.