Average Tax Refunds Down 8.4 Percent As Angry Taxpayers Vent On Twitter

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Did people seriously not understand this tax break was only for the very wealthy?
 
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JulianN said:
Did people seriously not understand this tax break was not for the very wealthy?
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I think you nailed it, Julian…my income is $180K, and I saw an increase in my refund; my children’s income is $80K and $85K, and they saw no change, or a slight decrease. However, I’m not sure how it is playing out for median income tax payers.

But, of course, there are many variables, in addition to income, but those claiming this great tax reform was a winning proposition for the working class, may not be seeing a net gain.
 
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I realized I mistyped—I meant to say ‘only’ for the very wealthy. But it looks like you understood what I meant instead of what I wrote! 😊
 
I do not think so. When everything that one doesn’t want to hear is dismissed as “fake news,” it is easy to be willful ignorant, at least until tax time.
 
Back when the tax bill was passed, it was reported everywhere that the IRS was changing the withholding tables so that people had more take home pay and it was advised that if you wanted a larger refund, you need to change your W-4 (withholding document). Obviously the people the HuffPo talked to didn’t take that advice. It really is just an example of how woefully ignorant people are about taxes (myself included). A refund isn’t a reflection of how much you owed the government in taxes, it’s a reflection of how much you overpaid throughout the year, giving the government an interest free loan. Financial planners all tell you to adjust your withholding so that at the end of the year you either get a small refund, or owe a small amount.
 
For many of us, the change in deductions meant both. Infinitesimal change (as in pennies) in take-home pay, and several thousand more in taxes.
 
Tax refunds are not an indicator of taxes owed. In fact, large tax refunds are a sign of not understanding what a refund is. A large refund is nothing more than having allowed the government to keep and use your money interest free. The government is not doing you a favor by giving you a refund. It is the government returning to you what was already yours in the first place.
The proper way to do a “refund” is to set your withholding up in such a way that you zero out at tax time, or even better if you have the discipline, set your withholding up where you owe, putting the money in savings so that you are using government money (what you actually owe in taxes) interest free. You pay the tax and keep the earnings.
 
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JonNC said:
Tax refunds are not an indicator of taxes owed.
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Of course not. They are an indicator of a mis-match between the withholding tables and the tax rate (when all other conditions are held constant). So when the Trump tax law was passed, Trump pointed to the larger take-home pay everyone was getting as “evidence” if his huge tax cut. Now we see that all they were really seeing in their take-home pay was a figment of the withholding tables (which also got changed). So you should have been correcting Trump at that time by posting that “larger take-home pay is not an indicator of taxes owed.”
 
LeafByNiggle said:
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JonNC:
Tax refunds are not an indicator of taxes owed.
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Of course not. They are an indicator of a mis-match between the withholding tables and the tax rate (when all other conditions are held constant). So when the Trump tax law was passed, Trump pointed to the larger take-home pay everyone was getting as “evidence” if his huge tax cut. Now we see that all they were really seeing in their take-home pay was a figment of the withholding tables (which also got changed). So you should have been correcting Trump at that time by posting that “larger take-home pay is not an indicator of taxes owed.”
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The determination if someone has more take home pay is if a smaller percentage of their income is taken in taxes. If your taxes are less, you have more take home pay.
Families with children have a larger deduction. If that results in a smaller percentage of taxes taken, you have more take home pay.
Here it is: did any marginal rate go up?
We’re any deductibles removed ?
If not, no one’s taxes went up unless their pay did.
 
JonNC said:
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LeafByNiggle:
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JonNC:
Tax refunds are not an indicator of taxes owed.
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Of course not. They are an indicator of a mis-match between the withholding tables and the tax rate (when all other conditions are held constant). So when the Trump tax law was passed, Trump pointed to the larger take-home pay everyone was getting as “evidence” if his huge tax cut. Now we see that all they were really seeing in their take-home pay was a figment of the withholding tables (which also got changed). So you should have been correcting Trump at that time by posting that “larger take-home pay is not an indicator of taxes owed.”
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The determination if someone has more take home pay is if a smaller percentage of their income is taken in taxes. If your taxes are less, you have more take home pay.
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No, no, no, no, no! Besides the wages, take home pay is a function of one thing and one thing only. That is the withholding amount. That withholding amount is only approximately representative of taxes. When the tax law changed, the withholding tables changed, resulting in more take-home pay, which Trump touted to no end. And all the people saw it and cried out together, “Amen!”

But now we see by the smaller refunds that the withholding amount was lowered more than the taxes were lowered. This is for people who made no changes in their exemptions and who earned about the same amount as the previous year. Now they are seeing that their perception of the effect of the tax change is different from the reality.
We’re any deductibles removed ?
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Yes. They were called “loop holes” and removed. The law was more complicated than you know.

If refunds are not indicators of taxes, then withholding is also not an indicator of taxes.
 
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We are what would be considered middle class income level. We normally set our withholding to zero out. We get a minimal to no refund.

This year, having kept everything the same, we saw pennies more (less than a dollar)per pay check. But we owe thousands in taxes. For us, the changes to the tax code meant actual higher taxes.
 
JulianN said:
For many of us, the change in deductions meant both. Infinitesimal change (as in pennies) in take-home pay, and several thousand more in taxes.
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If you’re in the upper 10% of income earners and live in a state with a high income or property tax rate, your taxes may well have gone up. If you’re not, and you didn’t get a large raise or financial windfall, it’s hard to imagine a situation in which you paid more in federal income taxes in 2018 than 2017. I’m not saying it couldn’t have happened, only that you would be in a very unique situation.
JulianN said:
We are what would be considered middle class income level.
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Middle class is a relative term. An income that would put you in the lower middle class in NYC or San Francisco would put you in the upper 5% in many places.
 
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You stated you make $180.000. That is a great deal of money in the USA. The median income for families is only $59,000.
 
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Don’t know where that’s coming from—let’s just say, “I wish!”
 
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