Tax Season!!

[chascornell]

This years refund/penalty has a lot to do with your withholdings. I have done a few people’s taxes this season and Chad is definitely right about the mileage! I think the new system will balance out more with about 50/50 get refunds/penalties, whereas in the past few years 75% or more of people got refunds. So yes, the government having less of our money throughout the year makes more sense for us, but people don’t understand why they aren’t getting a refund. One person who had historically gotten a mileage deduction ended up owing a substantial amount, so they decided to go with the standard deduction instead. It seems to me that the largest factor in affecting a return is the child tax credit and earned income credit.


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[fenders53]

Can someone explain how "they" can change the tax code, then hit you with a penalty for not adjusting your withholding that year? Am I missing something here?

[chascornell]

The IRS made everyone’s employer change withholdings when the new tax law came out, and some of the withholdings were incorrectly calculated


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[Otter]

(02-08-2019, 11:07 AM)fenders53 Wrote: Can someone explain how "they" can change the tax code, then hit you with a penalty for not adjusting your withholding that year?  Am I missing something here?

The new withholding calculator issued by the IRS in 2018 did a poor job of calculating withholding. It resulted in a lot of people not withholding enough from their pay, and owing the IRS once the tax bill came due this year. 

I got lucky, as my bonus last year was paid under the old withholding tables and resulted in a refund payable this year. Have already submitted a W-4 to adjust my withholding during this year, as it looked like I would have to write a hefty check in 2020 if I didn't.

[fenders53]

That makes sense but Chas mentioned a "penalty". After reading it again, I assume he is actually just referring to additional tax tax owed. And I understand how that will make the financially challenged somehow think their tax rates went up when they file.

[Otter]

(02-08-2019, 02:09 PM)fenders53 Wrote: That makes sense but Chas mentioned a "penalty".  After reading it again, I assume he is actually just referring to additional tax tax owed.  And I understand how that will make financially challenged somehow think their tax rates went up when they file.

Some folks did see their total tax liability go up. Thankfully, I did not. However, people who used to benefit from a lot of personal exemptions and deduct a hefty amount of state and local taxes are those most likely to have seen their federal income tax burden increase.

[fenders53]

(02-08-2019, 02:20 PM)Otter Wrote:

(02-08-2019, 02:09 PM)fenders53 Wrote: That makes sense but Chas mentioned a "penalty".  After reading it again, I assume he is actually just referring to additional tax tax owed.  And I understand how that will make financially challenged somehow think their tax rates went up when they file.

Some folks did see their total tax liability go up. Thankfully, I did not. However, people who used to benefit from a lot of personal exemptions and deduct a hefty amount of state and local taxes are those most likely to have seen their federal income tax burden increase.

That was my understanding after reading this thread.  I just read "penalty" and thought "fine" which didn't make sense to me if your employer caused it.  I suppose I should do my taxes soon.  I can't remember the last time I took anything other than the standard deduction, but I do have rental property profit to compute.  Hopefully that hasn't changed significantly.

[ChadR]

Fenders,

With your rental property being profitable, you can get up to a 20% deduction on the profit.

[fenders53]

(02-08-2019, 06:50 PM)ChadR Wrote: Fenders,

With your rental property being profitable, you can get up to a 20% deduction on the profit.

Thanks Chad.  That is great news.  I did a little digging and saw the big increase in the standard deduction.  That pleases me as it helps some of the people I see in real life at my retirement job.  The folks I mentioned earlier in the thread.  Folks willing to work pretty hard for a lowish wage rather than stay home and look for a handout.  Sure they would be in a better position now if they had a better education, or funded their own retirement like I did, so they aren't in a jam at age at age 70.  But it is what it is and it pleases me when we provide an incentive to make your own way in this world.  I didn't like the trend under the last presidency.  Saw too many able bodied people mooching.  I don't want to see an over-reaction from the current guy.  I think we are on a bad course when we encourage people to stay home because they can't afford child care costs without a big assist at tax time.  I hope things like that stay in the tax law even though I don't benefit a dime from it.   

I need to get educated on taxes before I start drawing from my 401K and multiple pensions in three years.  I have no idea if my rental property and such with still make sense.

[fenders53]

(02-08-2019, 06:50 PM)ChadR Wrote: Fenders,

With your rental property being profitable, you can get up to a 20% deduction on the profit.

Thanks Chad.  That is great news.  I did a little digging and saw the big increase in the standard deduction.  That pleases me as it helps some of the people I see in real life at my retirement job.  The folks I mentioned earlier in the thread.  Folks willing to work pretty hard for a lowish wage rather than stay home and look for a handout.  Sure they would be in a better position now if they had a better education, or funded their own retirement like I did, so they aren't in a jam at age at age 70.  But it is what it is and it pleases me when we provide an incentive to make your own way in this world.  I didn't like the trend under the last presidency.  Saw too many able bodied people mooching.  I don't want to see an over-reaction from the current guy.  I think we are on a bad course when we encourage people to stay home because they can't afford child care costs without a big assist at tax time.  I hope things like that stay in the tax law even though I don't benefit a dime from it.  It encourages responsible behavior and helps our productivity.  I really need to get educated on taxes before I start drawing from my 401K and multiple pensions in three years.  I have no idea if my rental property and such with still make sense.