DawgTalkers.net Forums DawgTalk Palus Politicus Its Tax Time

https://www.wsj.com/articles/early-data-show-slower-start-to-tax-season-11549653138

Early Data Show Slower Start to Tax Season
IRS says operations running smoothly despite earlier government shutdown

A portion of the 1040 U.S. individual income tax return form for 2018. PHOTO: MARK LENNIHAN/ASSOCIATED PRESS

By Richard Rubin
Feb. 8, 2019 2:12 p.m. ET
WASHINGTON—The first tax-filing season under the new tax law got off to a slower start than last year and filers so far are seeing smaller average refunds, according to early Internal Revenue Service data released Friday.


Now that the new tax law is in place, your deductions and refunds may not look the same as last year. WSJ's Richard Rubin gives us the scoop on what's changed, and how your return could be sweeter (or less sweet) than years past.
With about 10% of households filing their returns, the percentage of households getting tax refunds is similar to last year, but average refund size is down 8%, to $1,865. The number of returns filed so far—16 million—is down 12% from the similar point a year ago.

“Filing season has successfully launched with millions of tax returns having been filed,” Treasury Secretary Steven Mnuchin said in a statement. “We thank the Treasury and IRS employees who have been working diligently to ensure the system is processing these returns efficiently.”


The first batch of weekly data from the IRS offers a very preliminary, unrepresentative look at what’s happening to taxpayers using the new tax system, which increased the standard deduction, lowered rates, and curbed some deductions. Typically, early filers are those who expect significant refunds, while those who owe money file closer to the mid-April deadline.

The picture will become clearer later this month, as tens of millions more returns are processed. The IRS is required to withhold certain refunds containing the earned-income tax credit and child tax credit until Feb. 15. The IRS, which had been partially shut down in the run-up to filing season, says it is running smoothly so far.

According to the IRS, 90% of taxpayers will get refunds within 21 days if they e-file and use direct deposit.

About two-thirds of households are getting tax cuts for 2018 under the law, and just 6% are paying more, according to the Tax Policy Center. But the size of those tax cuts may not be reflected in refunds, which are just the end-of-year reconciliation of what a taxpayer owes and what was withheld or paid during the year.

Many taxpayers received much of the benefit through reduced paycheck-withholding throughout 2018. On average, refunds should be larger than usual according to estimates from Evercore ISI and Morgan Stanley .


Still, tax experts and preparers expect many households to be surprised by the size of their refunds—in both directions—and, on balance, millions of people may shift from getting refunds to owing taxes.

Retailers watch refund size closely, because many Americans use the money they expect each spring for major purchases.

This needs to change. If this crap keeps up like this, we are going to be posting 1.5 to 2 Trillion plus deficits per year

https://itep.org/netflix-posted-biggest-ever-profit-in-2018-and-paid-0-in-income-taxes/

Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Taxes
February 5, 2019

Hugely profitable tech company provides first look at how corporations are faring under new tax law

The popular video streaming service Netflix posted its largest-ever U.S. profit in 2018­­—$845 million—on which it didn’t pay a dime in federal or state income taxes. In fact, the company reported a $22 million federal tax rebate.

After a year of speculation and spin, the public is getting its first hard look at how corporate tax law changes under the Tax Cuts and Jobs Act affected the tax-paying habits of corporations. The law sharply reduced the federal corporate rate, expanded some tax breaks and curtailed others. The new tax law took effect at the beginning of 2018, which means that companies are just now closing the books on their first full year under the new rules.

If Netflix’s earnings report is any indication, not much has changed. Many corporations are still able to exploit loopholes and avoid paying the statutory tax rate—only now, that rate is substantially lower.

Netflix’s tax avoidance should come as no surprise to those who followed the debate leading up to the passage of the new tax law: A 2017 ITEP report identified Netflix as one of 100 profitable Fortune 500 corporations that paid a 0 percent federal income tax rate in at least one profitable year between 2008 and 2015. In fact, Netflix did it twice, and paid an average tax rate of 13.6 percent over the eight-year period, meaning that the company sheltered more than half of its profits from the 35 percent federal income tax rate in effect at the time.

Leading up to the 2017 tax battle, the hope of reformers was that Congress would take a fiscally responsible approach and weed out loopholes that made Netflix’s tax avoidance possible. Instead, GOP leaders who championed the law and President Trump chose to focus on cutting the corporate tax rate as far as possible—from 35 to 21 percent—while leaving in place special breaks and loopholes.

As more 2018 earnings reports begin to come in, we will see the results of this profligacy in real time. Netflix appears to be every bit as unaffected by corporate tax laws now as it was before President Trump’s “reform.” This is especially troubling because Netflix is precisely the sort of company that should be paying its fair share of income taxes. With a record number of subscribers, the company’s profit last year equaled its haul in the previous four years put together. When hugely profitable corporations avoid tax, that means smaller businesses and working families must make up the difference.

Read the comment section. There are lots of people venting and pretty po'd.

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

https://www.yahoo.com/


HuffPost Mary Papenfuss,HuffPost 16 hours ago

Average tax refunds were down last week 8.4 percent for the first week of the tax season over the same time last year, according to the Internal Revenue Service. Dipping refunds are inflaming a growing army of taxpayers stunned by the consequences of the Trump administration’s tax law — and the effects of the partial government shutdown.

The average refund check paid out so far has been $1,865, down from $2,035 at the same point in 2018, according to IRS data. Low-income taxpayers often file early to pocket the money as soon as possible. Many taxpayers count on the refunds to make important payments, or spend the money on things like home repairs, a vacation or a car.

The IRS had estimated it would issue about 2.3 percent fewer refunds this year as a result of the changes in the federal tax law, according to Bloomberg. MSNBC reports that 30 million Americans will owe the IRS money this year — 3 million more than before Trump’s tax law.

“There are going to be a lot of unhappy people over the next month,” Edward Karl of the American Institute of CPAs told Politico. “Taxpayers want a large refund.” Some 71 percent of taxpayers received refunds last year worth about $3,000 on average, according to Karl.

Scads of taxpayers are complaining on Twitter that they have always received a refund — but now owe the IRS instead.

The number of refunds sent out by the IRS was also down — about 24 percent — as the agency struggled to get up to speed after the government shutdown. The agency sent out about 4.67 million tax refunds in the week ending Feb. 1, compared with about 6.17 million in the same period in 2018, according to IRS data.

This year’s filing season, which began two days after the shutdown ended on Jan. 25, is complicated because it’s the first after the 2017 tax law was enacted. Though President Donald Trump boasted that the new code would be so simplified that people could file their taxes on a postcard, that’s not the case.

In addition, the changes complicated payroll withholding, so that not enough money was withheld by employers in many cases, meaning that people now owe more taxes. The new law also capped IRS deductions for paid state and local taxes, including real estate taxes, resulting in a nasty surprise for many filers. Several other deductions are no longer allowed.

The frustrations will likely continue to fuel support for plans to boost taxes on the ultra-wealthy. A poll last month found that nearly 60 percent of registered voters support a plan by Rep. Alexandria Ocasio-Cortez to impose a 70 percent marginal tax rate on the portion of annual income that exceeds $10 million a year.

Twitter is filling up with complaints from people whose situation has changed radically.


This article originally appeared on HuffPost.

They say refunds are down 8.4%.

The question is, how much does that equate to versus the extra they took home weekly? Did the change really cost them or just spread the return over the year.

I'm not saying they are wrong, but many people just aren't good with money management and probably used the extra weekly earnings right away, and now still expect the bigger refund.

As I said when he made his tax increase The old sick folks are going to pay for it.

I made an extra $500 last year. If you get your tax return and don't want you do have the option of giving it to me.

What tax return??? I OWE the IRS for 2018. Do you want to pay that for me

I haven’t gotten a refund in quite some time anyway, but this year I owe more to the IRS.

There’s a bunch of people saying the same thing, or got less than what they have previous years.

TB sounds like a typical elitist telling the peasants to be thankful for the crumbs they have.

An extra what? That “extra” got swallowed up by the cost of living going up.

You must be one of those one percenters who got huge savings.

Screw them bro. The POTUS doesn’t even pay any taxes. Stiff em. Besides the gov’t is shutting down again soon.

Nah they just feel this undeniable urge to follow the Pied pooper off the cliff.

Sure, I will do it in exchange for Browns tickets.

I bet they are open before April 14th when I file

j/c

I am amazed at how ignorant people are about their tax liability and their willingness to opine on something where they have no clue.

The article above states that 2/3 of the taxpayers now have a lower tax LIABILITY...for my clients it is 90%. Tax LIABILITY...that's your net 'skin in the game'. Look at THAT number year over year...it's the only number that matters in this debate. Your refund - or amount due - is just a function of you paying your tax LIABILITY.

To my determination, the only clients who lost out on the tax cuts were those who paid a great deal of real estate taxes and state/local taxes...AND...those who pay big fees to their money managers.

Now think for a second about the people mentioned in the above paragraph. Do they sound like middle-class people to you?

Sounds like you are somewhat of an expert? Or more knowledgeable than most?

If so - can you let me know - out of the total sum of tax that was cut/not collected as a result of the tax cut(I've read the total is over $1 trillion - I have no idea if that's correct). . . . of that total - what % went to the poorest 20% of the countries tax payers? What % went to the middle 20% and what % went to the top 5% ? I'm interested to see the $$ benefit to each bracket, I think that would be interesting and telling.

or those with a buttload of medical bills.

There are a lot of different sites that show graphs of "Who pays the income tax" and over several years. I've not seen the numbers you requested yet, however, the top 10% of income earners pay approx 70% of the income tax collected. The bottom 50% of income earners pay approx 3% of the taxes collected. Percentages also typically show that 40-45% of Americans do not pay any income tax.

The bottom 20% certainly pay no income taxes and likely get more back in a refund than they paid in - meaning a negative tax liability (often refereed to as welfare in the tax code). Since you cannot cut below zero, they did not benefit from a tax cut. When there is a tax CUT, it is only logical that those who pay the most get the biggest cut in $$$ paid in.

I'm a CPA and I do Accounting & Tax work for a living. I don't have many clients in the top 10%, but the ones who are pay an obscene amount of federal income taxes.

There is a very limited number of people who did not benefit from the tax cut as I mentioned above and as GM mentioned also...yet there are a TON of people spouting off about how they - and the middle class - got screwed and that there taxes went up...which is ridiculous.

You are correct. However, the restrictions on deducting medical bills has always been unfair to me and has never made any sense. The tax cut DID make it worse for people you mentioned and the doubling of the standard deduction made it better for others.

I think the 7.5% (now 10%) of AGI threshold is bad policy and it is remarkable that it wasn't/hasn't-been addressed...and in fact went in the opposite direction.

So the fabulously wealthy pay the most tax? And the poor pay the least tax - or they gain a net benefit from taxes? Hmmmm - I wonder why that would be? The way you wrote it those facts was almost as if you thought it was unfair? Like when you used the word 'obscene' ...

As for the wealthiest people paying obscene tax ? I disagree. Those that I know personally pay the least as a % of their income, like Trump and Buffet - they take advantage of loopholes and end up paying comparatively little. I don't blame them, anyone would do the same.

I'd be interested to compare how much the wealthiest 10% or 15% in the USA pay in tac versus the rest of the 1st worrld / industrialized nations. My guess would be they are toward the lower 1/3 ??? An initial google search seemed to hit only corporate tax comparisons.

A family of four that makes $105,000 in wages a year has a federal tax liability of $4,000 after credits.

A family of four that makes $505,000 a year in wages has a federal tax liability of $121,000.

Both families drive on the same roads and get the same services from the government. If that's not obscene, I don't know what is.

You know Trump & Buffet? Interesting. I know you realize how few people are in that bucket. Loopholes? No...it's called capital gains taxes. Do you know what would be the capital gains tax rate for the above two families?

20% for the second family...0% for the first family.

I think your focusing on the wrong issue. Paying less than 4% tax is the bigger issue, not paying less than 25%.... And that's not even questioning why you choose those thresholds and what assumptions you made to come up with those tax liabilities.

As for suggesting that they should both pay the same tax because they are both driving on the same roads etc ... That's not how income tax works anywhere on the planet.

As for suggesting I know Warren and Trump, that's just your poor comprehension skills.

I’ll take that bet.

. what no credits for the 2nd family?

Nevertheless yes..you pay tax on the income you make.

You make more income you pay more taxes. After all it’s called income tax. It’s taxation with representation. It’s what we fought for during our revolution in the 18th century if you’re Into history and such.

Also, buy and sell property for profit and receive capitol gains during the year you pay taxes on those gains. Really it’s pretty simple.

Assumptions that I made? No, those were tax returns that I actually prepared yesterday. You are the one making assumptions about Trump's and Buffet's tax returns - where you have less than an assumption as to the reality there.

I NEVER suggested that the two families should pay the same in taxes. You made yet another assumption. I was merely making a point. How much more should the second family pay? If the tax cut gave family #1 an extra $2,000 in their pocket and family #2 got an extra $10,000 in their pocket - over the previous tax law - who received the biggest "benefit" from the tax cut? Of course the one paying in the most to begin with...isn't that "how it works". Meanwhile, family #2 is still paying approx 25x what family #1 is paying. Hence the use of the word obscene. Again, how much more is "fair"?

If you want someone to comprehend what you MEAN...you should probably write it that way. In that regard, I said that you certainly know that Trump and Buffet represent a ridiculous % of the taxpaying population...you cannot assume your way into equating people like that with a wide demographic of other people.

Haven't got my taxes done yet. Working on it. I have two entities to do taxes for, my company and personal (wife and I) So I've still got a little work to do.

Something I heard the other day (read actually) is that the government is taking less out of paychecks and my first thought was that, wait, the Government doesn't take anything out, Employers do so I thought, gee that's a little stupid.

Then an explanation was offered. Tax rates were adjusted so that people would see more money in their weekly/bi weekly/monthly paychecks. That gives the sense that the tax cuts are working for them..

But now you are seeing a drop in tax refunds.. It's because was they received part of their refunds during the year. I don't know the numbers yet so I can't tell if it balances out. Guess we'll see in the short term future.

But if accurate, it's pretty sneaky to give people more take home during the year only for them to find out that the refunds they were expecting aren't as large.. Sneaky...

The second family makes too much money to receive any credits. You know..penalize the rich and all that.

The tax cut was a cut for people who pay taxes...and the more you make, the more you pay. I am not disputing that. How much MORE should they pay?

What I am saying is that a lot of people "think" this was just a tax cut for the "rich" - which is ridiculous. Some especially-clueless people think this was a tax hike on the middle class - which is simply ignorance of the issue.

Did you get the point on the capital gains tax rate? The "rich" has a capital gains tax rate of 20%...the other family has a capital gains tax rate of 0%.

Cost of living goes up regardless if your pay does or not, so the "extra" is not really tied to it, but if you got an extra 20-25 a week in your check that's 20-25 more a week to offset those costs. BUT it is money you got then, versus after you file (In the case of people who get returns).

I wasn't saying they made out better, I was asking what the difference between the increase in the weekly take home versus the lower tax return was, if they came out better or worse. It was a legitimate question.

As for the one percenter comment, I thought that was beneath you since, I have always tried to keep insults and derogatory remarks out of our interactions, and I felt it was an unnecessary added comment.

/smh

Why? Nothing wrong with being a one percenter. I inspire to be like that everyday. Can’t have a lambo in the driveway working 9-5’s. That’s why I invested into properties and talk about the stock market.

It’s also why my tax bill went up lol.

I most certainly am not a one percenter.

I put in 47-50 hrs a week, and since I am the only IT person in the company, I am on call even when I take vacation.

You are mostly correct. Where I encourage you to look is at your tax LIABILITY year-over-year. Not your refund. What was your contribution to the federal government? THEN, look at your gross income year-over-year to get closer to apples-to-apples.

For every tax cut in my professional life, the powers-that-be worked the system to get $$$ into people's pockets immediately - rather than wait until tax time. That is done to spark the economy and to allow for political points in the short term.

Likewise for every tax cut in my professional life, "people" don't remember the extra money they received as a lump sum or in their paychecks. They only remember what recently happened...like fans of a place kicker.

The government changed the withholding tables (back in Feb) that the employers must use to withhold taxes. That change put the tax cut in your hands RIGHT AWAY (in each paycheck) based on a lot of assumptions regarding what was an individual's expected tax cut benefit.

Sneaky? Maybe...because they didn't/don't explain it like they probably should. I call it short-sighted...because people generally have no clue why they get a refund or owe in the first place (because no one talks about the tax LIABILITY) and people only remember the lower refund and not the extra takehome pay that they have already spent or saved.

A tax refund doesn't come from some special pot of cash held by the IRS. It was your money all along...you just let the government hold it for you until tax time. I know you know this...I know a lot of people do NOT know/understand this.

If you are not a one-percenter and invest in real estate and the stock market...and your tax bill went up...then two things happened:

Either you made more money and therefore paid more; or

You need a better tax preparer.

Just remember we can't write off these types of gambling loses lol

What people fail to realize, is that they may have a lower tax refund, its because they paid less all year. I received less, but overall I paid about 2,000 less than I did last year.

oh my income increased. im not really whining about paying more in taxes, as i like paying taxes, just wished it was spent better.

im just laughing at all the trump supporters on social media who are whining about their bill going up, while the super wealthy got huge savings. everyone saw it coming except trump supporters.

I can't even begin to tell you how many times I've been told, when discussing the tax cut more for the rich than the average Joe/Jane that hey, I'm getting $70 more per month in my paycheck so I know the tax breaks are for me.

If, and it's a big if, they lowered tax rates to put money in peoples pockets all year, but the result is a lower refund, then yeah, its sneaky..

Here's what I'd look at, and you may be saying the same thing. Add together the extra money you received during the year and your refund, if it's a bigger number than your total tax refund from previous years, maybe you got a tax cut. If it isn't, you may have gotten scammed.

That still doesn't get the same picture lol.

You have to look at the TOTAL amount of taxes you OWED last year. Not your refund, not what was taken out of your check. What your TAX LIABILITY was LAST YEAR.

Then, take a look at THIS years TAX LIBABILITY, and compare the two.

IF you had LESS a tax liability - you benefited. Even if you get less back as a refund.

If you had a LARGER tax liability - you did not benefit.

The reason the way you are saying to do it doesn't show the correct picture, is because your TAX liability should be different from the two years. So the amounts you paid/received back would be different between the two years as well. So you just cant do it that way to get the correct picture.

Your TAX LIABILITY is what you owed in TAXES for the year.

Your refund/amount due, has nothing to do with what YOU OWED to the US Government for the two years.

The point of a tax cut is to LOWER your TAX LIABILITY, not increase your refund.

I owed 4k last year, I am really hoping that goes down. I suck at tax finance, I just take it to someone.