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Lower tax refunds? Are they a problem?

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Lower tax refunds? Are they a problem?

Unread postby vtsnowedin » Fri 08 Feb 2019, 21:38:00

I'm seeing articles out there where the media is crowing about this years tax refunds being lower then last years. The point they are trying to push is that the GOP/Trump tax cut was a bad deal. But was it really? Looking at the recently released IRS data shows the early refunds are only eight percent lower then the previous year. Not much of a change and would mean tax payers have lent less to the government interest free over the last year. If they changed the withholding tables correctly and only withheld what you actually owed that is a good thing. Isn't it?
Of course the full story won't be known until tax season is over and added up. People that got refunds last year and owe this year wont file until April and visa versa so the total change can't be added up month to month which makes the stories they are filing now quite silly but that has never stopped them before.
https://www.wsj.com/articles/early-data ... 1549653138
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Re: Lower tax refunds? Are they a problem?

Unread postby Cog » Fri 08 Feb 2019, 21:54:51

If you are in a high state income tax state, you are now limited in how much you can deduct from your federal return. That might be part of what we are seeing. I've never understood people who overpay during the year and brag about how much of refund they are getting. Seems stupid.
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Re: Lower tax refunds? Are they a problem?

Unread postby vtsnowedin » Fri 08 Feb 2019, 22:19:09

I would think very few people are in the group that pays more then $10,000 in state and local tax. I'm certainly never going to make that cut.
It is funny watching the Democrats rave about taxing the rich at the same time they want to restore the full deduct-ability of state and local taxes to get votes and donations from the high tax states rich people.
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Re: Lower tax refunds? Are they a problem?

Unread postby Cog » Fri 08 Feb 2019, 22:23:39

They really don't want people questioning why their state income taxes are so high to begin with.
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Re: Lower tax refunds? Are they a problem?

Unread postby EdwinSm » Sat 09 Feb 2019, 01:33:05

OK I am in a different tax situation, but when I was doing the pay roll for a small (social services) association, a number of the staff asked me to deduct tax at a higher rate than on their tax card. They used this as a way of savings.

The Finnish Government does pay interest on excess tax, and the tax returns were paid at the beginning of December, making it a simple way for people to save for Christmas expenses.

However, it should be noted that from the beginning of this year, the reporting system has changed and companies have to report individual tax details every month - in part in a bid to stop both over and under payment of tax; and in part to be better able to detect the effects of the "grey" economy [ie unreported earnings, such as several months with no offical income but not registered unemployed]
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Re: Lower tax refunds? Are they a problem?

Unread postby vtsnowedin » Sat 09 Feb 2019, 13:06:43

I just E-filed my taxes for 2018. My combined refund is up $60 but that is an apples to oranges comparison as the two years have a lot different income levels. I back worked this years income into 2017 rules and rates and I would have paid $3400 more under the old rules on this years income. My effective tax rate on total gross income went from 12 % down to 7.6%
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Re: Lower tax refunds? Are they a problem?

Unread postby jedrider » Sat 09 Feb 2019, 13:20:56

Cog wrote:They really don't want people questioning why their state income taxes are so high to begin with.


But, we understand where state income tax funds go. The federal government, on the other hand, is amorphous and spends what it doesn't even have.
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Re: Lower tax refunds? Are they a problem?

Unread postby Outcast_Searcher » Sun 10 Feb 2019, 02:44:24

vtsnowedin wrote: It is funny watching the Democrats rave about taxing the rich at the same time they want to restore the full deduct-ability of state and local taxes to get votes and donations from the high tax states rich people.

Yes, it's absolutely hilarious. The liberals seem to love the idea of draconian income taxes, as long as THEY don't have to pay them. And if their taxes might go up then they bleat loudly about it, even as they brag about all the government benefits they get by living in a high tax state like CA.

If only there were enough of other peoples' money so that they could have things their way, but not have to pay anything. :roll:
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Lower tax refunds? Are they a problem?

Unread postby vtsnowedin » Sun 10 Feb 2019, 18:35:37

MSNBC again going on about refunds being eight percent lower then last year. No mention of the total tax paid or having less withheld during the year.
They post tweets from people that claim that their income was the same but the refund less. Could be, I suppose if your paychecks take home were higher or if your in a state with high state and local taxes and you pay them more then $10,000 in taxes. Not the group of people I'm worried about.
Edit to add link to example.
http://www.msnbc.com/stephanie-ruhle/wa ... 9508035766
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Re: Lower tax refunds? Are they a problem?

Unread postby rockdoc123 » Sun 10 Feb 2019, 19:31:31

If only there were enough of other peoples' money so that they could have things their way, but not have to pay anything. :roll:


Indeed...or said by some famous folks:

The problem with socialism is that you eventually run out of other people's money.

Margaret Thatcher

There are two places only where socialism will work; in heaven where it is not needed, and in hell where they already have it


Winston Churchill
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Re: Lower tax refunds? Are they a problem?

Unread postby vtsnowedin » Mon 11 Feb 2019, 22:27:21

I would think that one of the networks would canvas their own employees for some real life examples. After all the building contains every economic level from janitor to CEO. They ought to be able to show actual results for people from each tax bracket, with kids and without, home owner/renter ,children in college too old for child tax credit,paying in to 401k or pulling out from one.
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Re: Lower tax refunds? Are they a problem?

Unread postby Outcast_Searcher » Tue 12 Feb 2019, 03:46:14

vtsnowedin wrote:I would think that one of the networks would canvas their own employees for some real life examples. After all the building contains every economic level from janitor to CEO. They ought to be able to show actual results for people from each tax bracket, with kids and without, home owner/renter ,children in college too old for child tax credit,paying in to 401k or pulling out from one.

The good news is the IRS will be able to show such data for the entire country, by income bracket, at some point. People in, say, the various quintiles, will either be paying more taxes, or they won't.

That has little to NOTHING to do with how much refund they got -- which has far more to do with how well they adjusted their withholding statements, and apparently there were some problems with those, including some of the IRS instructions, from what I've read.

Even an honest canvas (which I wouldn't trust from various news agencies, the way they love to spin politics) would just be a small sample. The real data should be available to show and discuss in time for the election (I would certainly think).
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Lower tax refunds? Are they a problem?

Unread postby vtsnowedin » Tue 12 Feb 2019, 05:58:28

The IRS will not be considered a reliable source. The liberal left will accuse it of pushing Trumps agenda if the data shows an average cut. And the far right Trumpers will accuse it of being deep state corrupt and trying to undercut Trump if it shows an average tax increase.
You can also count on MSNBC to only bring forward examples from high tax states where the tax payer takes a hit from that and or the loss of personnel exemptions.
Fox news will of course do the opposite.
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Re: Lower tax refunds? Are they a problem?

Unread postby vtsnowedin » Tue 12 Feb 2019, 06:01:36

Hopefully a few members here will chime in with their own results (in round figures or just percent change) as they file their taxes. I expect we have a fair cross section of the brackets in the middle.
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Re: Lower tax refunds? Are they a problem?

Unread postby Outcast_Searcher » Tue 12 Feb 2019, 17:09:36

vtsnowedin wrote:The IRS will not be considered a reliable source. The liberal left will accuse it of pushing Trumps agenda if the data shows an average cut. And the far right Trumpers will accuse it of being deep state corrupt and trying to undercut Trump if it shows an average tax increase.
You can also count on MSNBC to only bring forward examples from high tax states where the tax payer takes a hit from that and or the loss of personnel exemptions.
Fox news will of course do the opposite.

Respectfully, the news commentary business to sell soap (formerly known as the actual news media) won't be reliable, pandering to politics as usual, as you say.

However, though there may be shrill whining from either side, IMO, there's no viable evidence to suggest the IRS isn't reliable in reporting data re aggregate tax numbers. And there's no better data source to really look at the big picture than a summary OF the big picture.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Lower tax refunds? Are they a problem?

Unread postby Outcast_Searcher » Tue 12 Feb 2019, 17:13:59

vtsnowedin wrote:Hopefully a few members here will chime in with their own results (in round figures or just percent change) as they file their taxes. I expect we have a fair cross section of the brackets in the middle.

I'll be happy to chime in, though I usually don't know until early April. Too much potential of late 1099's, K-1's, etc. to be willing not to wait to file, and thus get final results from my preparer.

Unfortunately, being retired with investments over 80% of my income, my variance is likely to be too big to be particularly meaningful for this exercise. I suspect that a moderate number of our crew are in similar situations, re taxable income.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Lower tax refunds? Are they a problem?

Unread postby vtsnowedin » Tue 12 Feb 2019, 18:28:36

Outcast_Searcher wrote:
However, though there may be shrill whining from either side, IMO, there's no viable evidence to suggest the IRS isn't reliable in reporting data re aggregate tax numbers. And there's no better data source to really look at the big picture than a summary OF the big picture.

You have a very innocent view of our government agencies. What information they put out for public consumption is always well edited to make them look good and if you except their figures as being the whole true story they will manipulate your vote time after time.
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Re: Lower tax refunds? Are they a problem?

Unread postby vtsnowedin » Tue 12 Feb 2019, 18:47:18

Outcast_Searcher wrote:I'll be happy to chime in, though I usually don't know until early April. Too much potential of late 1099's, K-1's, etc. to be willing not to wait to file, and thus get final results from my preparer.

Unfortunately, being retired with investments over 80% of my income, my variance is likely to be too big to be particularly meaningful for this exercise. I suspect that a moderate number of our crew are in similar situations, re taxable income.

I had that same problem, this last years income being considerably higher then 2017s . To get to an answer I crunched this years figures into last years rules to see what I would have paid if the tax bill had not been passed.
I think that is worth the effort so you can speak with authority about how the tax law change has effected you. You as an investor have much different outcomes from a person like myself living on a combination of wages and pension payouts.
That difference between one tax payer and the next is the interesting part of this thread.
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Re: Lower tax refunds? Are they a problem?

Unread postby Outcast_Searcher » Wed 13 Feb 2019, 03:48:03

vtsnowedin wrote:
Outcast_Searcher wrote:
However, though there may be shrill whining from either side, IMO, there's no viable evidence to suggest the IRS isn't reliable in reporting data re aggregate tax numbers. And there's no better data source to really look at the big picture than a summary OF the big picture.

You have a very innocent view of our government agencies. What information they put out for public consumption is always well edited to make them look good and if you except their figures as being the whole true story they will manipulate your vote time after time.

And of course, you have solid evidence for this.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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