Taxes

[reinko]

I don't expect someone to understand tax law or tax mechanisms but I do expect someone to know whether they took home more or less money this year compared to last year....uts basic budgeting

Not attacking, but the vast majority of lower wage workers, work hourly with varied schedules, multiple jobs, drive Uber...so for folks like you and I who work on salary, your statement is spot on, not sure it would be as easy if my check was literally a different amount every two weeks.

[mu03eng]

I hope you know that you aren't one of those that I was criticizing.

I do, just putting my expectations out there is all.

[SERocks]

If the high schools would get back to teaching our kids "stuff" they NEED to know in order to have a productive life, such as how taxation works, would be a start.  Maybe if we allowed them to receive their full pay and they would be responsible(no pun intended) to write their with holdings check from that and send it in to our gubment, the true effect of taxes would then be appreciated.  I have a funny feeling that might drive our point home a little better

I have tongue in cheek argued this for years and have stated if the tax law was this way there would be a tax revolt like you have never seen.   This conversation typically takes place with a newly self employed individual when we go over how much they will owe in taxes and how they have to make quarterly payments.  If they actually do OK and make some decent money the burden approaches 50 percent of thir net earnings pretty quickly.

[mu03eng]

I have tongue in cheek argued this for years and have stated if the tax law was this way there would be a tax revolt like you have never seen.   This conversation typically takes place with a newly self employed individual when we go over how much they will owe in taxes and how they have to make quarterly payments.  If they actually do OK and make some decent money the burden approaches 50 percent of thir net earnings pretty quickly.

It's the perfect execution of the opt out model I advocate for with retirement funds like 401Ks.....you have to choose not to contribue otherwise money is automatically taken out, if the money is never in your pocket you never miss it. If people had to pay their taxes at the end of the year out of the funds they already received I think it would be a major eye opener, because as Jockey pointed out, the vast majority of people either can't or don't want to understand their taxes....they just want to know if they are getting money back (if I get money back from the government on a refund I consider it a failed year of money management for me)

[mu03eng]

Not attacking, but the vast majority of lower wage workers, work hourly with varied schedules, multiple jobs, drive Uber...so for folks like you and I who work on salary, your statement is spot on, not sure it would be as easy if my check was literally a different amount every two weeks.

It's a very valid point, and I will certainly plead ignorance as I don't know how much of the working population has an extremely variable pay schedule as you describe. I understand the concept of living pay check to pay check but what % of the population are we talking about has such a high variability of pay schedule that determining YoY take home pay becomes difficult.

FYI, with that kind of variability I'd also think that the tax refund metric wouldn't make sense either because it would also be highly volatile YoY so those folks wouldn't be the ones angry about lower than anticipated refunds. For the refund to be a steady metric until this year the wage earners would have to have a relatively stable revenue mechanism.

[MU82]

I suspect I was and, yes, I expect that you don't need an MA in Taxation to figure out that your refund is less important that measuring how much you paid against how much you made.

And yes, Brother Pakuni, with the Ken and Barbies on TV now, I do think what you see is what you get. TV and newspapers are shallow and most reporters don't get basic economics.

I have read a few mainstream newspaper articles about this situation. They were just-the-facts-ma'am reports. They quoted several taxpayers who were distraught to find out that their refunds won't be as high as previous years, and they quoted economists and/or politicians to say that's because the taxpayers likely received more take-home pay throughout the year and didn't realize it. A couple of the reports provided examples using actual math. They didn't come to conclusions or editorialize.

I also have read columnists and op/eds that have used examples to support their viewpoints, which of course is their job. As long as they are presented as opinion/analysis, it's good to have them available for readers to draw their own conclusions.

TV screamers who stump for one or the other party and who obviously have an agenda but pretend it's "news" ... I have little use for them, no matter the subject.

Real journalists are allies of the American people.

[Cheeks]

Real journalists are allies of the American people.

Agree, problem is those are hard to find these days.  The days of requiring two independent sources....the days of not using anonymous sources....the days of keeping one's opinion out of articles.....

Sadly gone.

[rocket surgeon]

  "TV screamers who stump for one or the other party and who obviously have an agenda but pretend it's "news" ... I have little use for them, no matter the subject."


  that sure whittles it down a little

[mu03eng]

I have read a few mainstream newspaper articles about this situation. They were just-the-facts-ma'am reports. They quoted several taxpayers who were distraught to find out that their refunds won't be as high as previous years, and they quoted economists and/or politicians to say that's because the taxpayers likely received more take-home pay throughout the year and didn't realize it. A couple of the reports provided examples using actual math. They didn't come to conclusions or editorialize.

I also have read columnists and op/eds that have used examples to support their viewpoints, which of course is their job. As long as they are presented as opinion/analysis, it's good to have them available for readers to draw their own conclusions.

TV screamers who stump for one or the other party and who obviously have an agenda but pretend it's "news" ... I have little use for them, no matter the subject.

Real journalists are allies of the American people.

Yeah I think a distinction should be made between newspaper media and TV media in this type of situation. Newspaper has the time/space to have that nuanced articulation of facts and information (whether people have time to read and/or understand is another question), whereas TV media has to disseminate "info" in 30 second bites and such articulation is either deliberately or as a byproduct of lack of time not done. The coverage from ABC national news the other day was frustrating, everything was positioned as if it was a problem including an interviewee directly tying a reduction in refund mean that there was no tax cut for them.

https://www.youtube.com/watch?v=qPKl-RGWcW4 

[Cheeks]

A classic response in Yahoo article.

Kelli (who wanted her last name withheld), tweeted to the president: "First time ever owing on taxes! Static income, but take away the itemization and we got hit hard! where's the middle class benefits? Sadly disappointed here!"


She actually thinks this is the first time she paid taxes.   Facepalm. Our schools are failing us miserably, the media isn't helping.  Dear Kelli, you've been paying taxes all along.  Don't confuse the year end "true-up" with the first time paying vs lending the gov't your money for free.

[Osiris]

If the high schools would get back to teaching our kids "stuff" they NEED to know in order to have a productive life, such as how taxation works, would be a start.  Maybe if we allowed them to receive their full pay and they would be responsible(no pun intended) to write their with holdings check from that and send it in to our gubment, the true effect of taxes would then be appreciated.  I have a funny feeling that might drive our point home a little better

+1

Financial literacy and media literacy should be part of every student's core curriculum......although part of me shudders at what those courses might end up looking like.

[Bocephys]

A classic response in Yahoo article.

Kelli (who wanted her last name withheld), tweeted to the president: "First time ever owing on taxes! Static income, but take away the itemization and we got hit hard! where's the middle class benefits? Sadly disappointed here!"


She actually thinks this is the first time she paid taxes.   Facepalm. Our schools are failing us miserably, the media isn't helping.  Dear Kelli, you've been paying taxes all along.  Don't confuse the year end "true-up" with the first time paying vs lending the gov't your money for free.

That is not what she said, and you know that, but choose to represent otherwise. 

She's clearly stating that her income was flat and yet her tax bill went up.

[rocket surgeon]

+1

Financial literacy and media literacy should be part of every student's core curriculum......although part of me shudders at what those courses might end up looking like.

  critical thinking skills based on facts, not feelings.  problem solving and learning how to think "outside the box"  teaching how to think, NOT what to think.  not everything fits into a little template

[Cheeks]

That is not what she said, and you know that, but choose to represent otherwise. 

She's clearly stating that her income was flat and yet her tax bill went up.

She said first time every owing taxes.  Her words.  She's owed the entire year just like most Americans, but most don't pay attention to their withholding.  I would bet serious dough that her "static" income also meant she had more take home each paycheck and she's referencing the actual total salary, not the net. 

The new tax tables are designed so you aren't lending the gov't money interest free or having to payout a big chunk at the end, but people are addicted to a refund that makes no sense.   https://www.chicagotribune.com/business/ct-biz-tax-refunds-withholding-deductions-20190212-story.html

"Getting a tax refund means that you gave the government an interest-free loan because you overpaid your taxes," said Nicole Kaeding, director of Federal Projects at the Tax Foundation, a right-leaning think thank.

But many Americans prefer refunds, even though personal finance experts say it's not a wise idea to get one.

"It's a mystery why taxpayers seem to be comfortable - and even happy - with getting refund checks," said Rosenberg.

[rocket surgeon]

  "She's clearly stating that her income was flat and yet her tax bill went up."

not enough info here to even respond-how much did she make?  was she already in that income class that did not benefit?  did she change her withholdings?  was she given a bonus in lieu of a raise that she isn't revealing while maintaining a "flat income"  and lastly but probably most importantly-who did she vote for?  if she doesn't like the person who initiated the tax changes gives her more reason to beach

remember human nature

[SERocks]

But many Americans prefer refunds, even though personal finance experts say it's not a wise idea to get one.

"It's a mystery why taxpayers seem to be comfortable - and even happy - with getting refund checks," said Rosenberg.[/color]

When interest rates were higher than they are today I would agree wholeheartedly with the statement that it is not wise financial policy to make an interest free loan to the government.  Over the years as rates dropped, my thinking on that changed some.  For some clients, the only way they will save any money is to not see it.  So for them an interest free loan to the government and a nice big refund is their savings plan, whether it be for a vacation, to pay down debt or whatever purpose.  So as with all things, I think the real answer as to whether or not a refund is a good thing depends upon the specific taxpayer.  And remember a ton of people are paycheck to paycheck so if they come up owing with their tax return, it could be a large burden to overcome.  As with all things taxes, the answer is never as simple as x, at least in my experience.

Most personal finance experts would also say that having a mortgage is a good idea, and that is another one where I think it depends a lot on the person, but that is another discussion altogether.

[The Sultan]

I don't think it's much of a mystery why people prefer refunds.  Because the alternative is writing an additional check.  And as I said earlier, federal taxation is complex.  I have a pretty good understanding of it and I still screwed up my withholdings mostly due to changes in my wife's income.  And those changes happened in September, which doesn't give one a lot of time to analyze and correct the problem. 

If a taxpayer could nail the exact amount of their taxation at the beginning of each year without doubt or mystery, most would do that.  But they don't understand it enough.  And its's not because it isn't taught enough in high school.  I'm 55 and never was taught it in high school.  It's because it is complex.  Figuring out your income, withholdings, deductions, etc. isn't easy.

So yeah people are happy to get a refund.  It's the better outcome of a complex process.

[Bocephys]

She said first time every owing taxes.  Her words.  She's owed the entire year just like most Americans, but most don't pay attention to their withholding.  I would bet serious dough that her "static" income also meant she had more take home each paycheck and she's referencing the actual total salary, not the net. 

The new tax tables are designed so you aren't lending the gov't money interest free or having to payout a big chunk at the end, but people are addicted to a refund that makes no sense.   https://www.chicagotribune.com/business/ct-biz-tax-refunds-withholding-deductions-20190212-story.html

"Getting a tax refund means that you gave the government an interest-free loan because you overpaid your taxes," said Nicole Kaeding, director of Federal Projects at the Tax Foundation, a right-leaning think thank.

But many Americans prefer refunds, even though personal finance experts say it's not a wise idea to get one.

"It's a mystery why taxpayers seem to be comfortable - and even happy - with getting refund checks," said Rosenberg.

No, she said first time ever owing on taxes.  Which is reasonably read as the first time she's owed money to the government after completing her taxes. 

You really believe that someone who understands that eliminating itemized deductions impacted her tax bill doesn't understand that taxes are taken out throughout the year?

[StillAWarrior]

That is not what she said, and you know that, but choose to represent otherwise. 

She's clearly stating that her income was flat and yet her tax bill went up.

I agree that she didn't say that this was the first time she paid taxes. But, she also didn't say her tax bill went up.

She said it was the first time she owed taxes. This is ambiguous. It could mean that her tax bill went up. It could also mean it's the first time she's had to write a check (i.e., she under-withheld). I interpret it as the latter. A good journalist would have asked follow-up questions to figure it out.

[Cheeks]

When interest rates were higher than they are today I would agree wholeheartedly with the statement that it is not wise financial policy to make an interest free loan to the government.  Over the years as rates dropped, my thinking on that changed some.  For some clients, the only way they will save any money is to not see it.  So for them an interest free loan to the government and a nice big refund is their savings plan, whether it be for a vacation, to pay down debt or whatever purpose.  So as with all things, I think the real answer as to whether or not a refund is a good thing depends upon the specific taxpayer.  And remember a ton of people are paycheck to paycheck so if they come up owing with their tax return, it could be a large burden to overcome.  As with all things taxes, the answer is never as simple as x, at least in my experience.

Most personal finance experts would also say that having a mortgage is a good idea, and that is another one where I think it depends a lot on the person, but that is another discussion altogether.

Fair enough

[Cheeks]

No, she said first time ever owing on taxes.  Which is reasonably read as the first time she's owed money to the government after completing her taxes. 

You really believe that someone who understands that eliminating itemized deductions impacted her tax bill doesn't understand that taxes are taken out throughout the year?

Based on the comments I'm reading in various articles, nothing surprises me any more what people do or do not know about their financial situation.  People need to take more control of their situation....Americans don't do this to a degree they should.

End of the day, it's about your liability, not your refund.  https://www.forbes.com/sites/howardgleckman/2019/02/12/its-about-your-tax-liability-not-your-refund/#12f97ba25292

[Bocephys]

I agree that she didn't say that this was the first time she paid taxes. But, she also didn't say her tax bill went up.

She said it was the first time she owed taxes. This is ambiguous. It could mean that her tax bill went up. It could also mean it's the first time she's had to write a check (i.e., she under-withheld). I interpret it as the latter. A good journalist would have asked follow-up questions to figure it out.

That's fair.  Everything would have to be static for it to count as her tax bill going up (withholding, income, potential deductions, etc.).

[Benny B]

Does it make you guys feel good to attack people for not fully understanding _______________________?

[Jockey]

+1

Financial literacy and media literacy should be part of every student's core curriculum......although part of me shudders at what those courses might end up looking like.

It is available in most high schools.  The problem is that it is usually an elective as opposed to a required class.

[Jay Bee]

It is available in most high schools.

#FakeNews #Lies