To be fair, there is a case to be said that taxes did go down but they were frontloaded instead of in the form of a bigger refund.
Let me try and explain:
Let's say you used to get...100.00 a pay period out on taxes and a 5000.00 refund (nice even numbers!). Under Trumps plan, you now got 95.00 dollars a pay period out. This is because the amount that was deducted because of the allowances you selected on your W-4 (and which should be reviewed and adjusted by you when things change in your life....but most people don't unless it's something big). The government, in it's wisdom, adjusted those deductions for the allowances so that you got more back in your paycheck. The problem is two fold with this.
Problem 1: With the NON-tax changes people with jobs have constantly in their paychecks (IRA/401K contributions, pre-tax commuter allowances, pre-tax benefit deductions, etc.), a LOT of people don't have a take home pay that is as....consistent as we're used to. For example, if you contribute to your IRA or 401K and you hit the maximum yearly investment in...let's say October...your take home pay for November and December will be higher because those deductions are no longer happening. So, using the example above, while you're getting $5.00 less in taxes taken out each pay period, it may not be as noticeable and is definitely not showing as a windfall. It is probably getting overlooked in most cases.
Problem 2: You refund is exactly that. Based on how you file your taxes and what deductions you claim, the IRS looks at what you should have paid for what you claim and what you did pay over the year. If you paid less taxes over the year, the difference between what you should have paid and what you did pay will be different. Depending on how you file and what is no longer deductible, you can end up with quite a difference ( for example if you had a home equity loan, there is no longer a deduction for that).
It's "pay me now or pay me later"
Mine is a very standard 1040ez, so I'm quite curious how mine will turn out.
My wife and I always choose the "Married but withhold at a higher single rate" option as that seems to take more tax out.
This year many exemptions one was able to claim for business (travel, supplies, etc.) has been eliminated. I believe the standard deduction (for those who didn't itemize) was also wiped out with the new tax reform - therefore, hurting many who earn under $75K.
Correct me if I'm wrong....
You're wrong. The standard deduction went UP to 12,000.00 for individuals and 24,000 for married.
Great - glad I'm wrong on this one. Got the incorrect information this week.
You're in New England, right? In a non-New Hampshire state?
There have been changes to the SALT deductions - they've been reduced.
Because of this - the reduced SALT deduction, (State & Local Tax Deductions) even though you paid $30,000 in state and local taxes, only $10,000 of this amount is deductible. Previously, there was no limit & you could get the entire $30K back.
This is mostly going to harm blue states like MA, CA, NY, MD, NJ, etc. - states with the highest standards of living in the US, best schools, most educated people.
Yes, I'm in Rhode Island. I think this was what I was actually thinking of in my post above. Thank You for clarifying for us!