Just wanted to point something out very quickly. Recently I decided it was time to start on my tax filing for 2018. I have all the paperwork, put in all the figures using an online service and waited to see what kind of refund I would get.
The answer was... none. In fact I owe.
Now for me, this is not a crisis. I don't owe a lot and I do have more than enough in savings to cover the bill. But I did notice that the standard deduction was the best one for me for the first time in many years. This is due to changes based on President Trump's tax legislation that put into place permanent tax cuts for corporations and temporary tax cuts for the middle class. While I did see a little bump in my take home pay when this legislation was enacted, that same legislation doesn't allow me the same deductions as a mortgage paying homeowner. So this changed my expected refund to an unexpected bill.
I have a feeling I won't be the only one affected. Many people will be receiving reduced refunds or will end up owing taxes this year. Yes, if they had noticed a bump in their paychecks and put that additional money aside, they would likely have more than enough to cover the difference. But how many people actually did that? I'm afraid there are a lot of people who live paycheck to paycheck. When they saw a bit of a bump in their pay (which will eventually go away), they likely spent it. An extra pizza night. Going to the movies. A little more shopping. Great for the economy, but these people were likely still anticipating a tax refund.
Some will still get refunds. I know a lot of people who claim less exemptions on their taxes because they want a huge refund. Not realizing it would be wiser to claim the proper amount of exemptions and bank that extra money. Most accountants recommend that you structure your tax payments so you get either a very small refund or owe a very small amount in taxes. Because if you put that money in any type of savings account or investment, you'll earn SOMETHING on it. When it's a refund, you get no interest on that money. A refund is YOUR money that you basically lent to the government, interest-free. Why do people do this? Many of them because they don't think about saving.
But I have a feeling a lot of refunds will be reduced this year and many people who are used to refunds are going to owe. These people are going to demand an explanation. And when they find out it's due to the tax cut bill that President Donald Trump put through as his signature piece of legislation, they aren't going to be happy.
With the unpopular Government shut down fresh in people's minds and the prospect of another one, a flurry of people not getting the refunds they "deserve" is likely to negatively affect Trump's approval rating even more. The only upside for the President is, even if he won re-election, the middle class tax cuts aren't set to expire until 2025. So whoever succeeded him would have to deal with that issue.
Almost like he planned it.
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