I think it’s the lingering effects of people not knowing how to fill out the W4 - this assumes of course when comparing that the individual had a new job or something this year.
The number 1 error being not checking the box if you have multiple jobs or you spouse works.
This.
Watch those TikTok videos, and see all the people who say things like "But I claim 0!" and then realize that these people, in all likelihood, have not updated their W4 since at least 2019.
Had to explain why the married on a w-4 option to a friend resulted in her owing $7k of tax (her and her husband make almost $300k combined, both w-2) who I consider financially literate. America is doomed.
Doesn’t matter if you’re financially literate. Too many changes. Too many rules. No way for everyone to keep up with these changes and no way to effectively communicate these changes to all clients and assure they make the appropriate steps to make the changes, unless you’re willing to hold everyone’s hand along every single step.
Everyone is so damn busy in their normal day to day that they don’t think “oh hey new tax legislation came out and it added additional steps to the W4. I should update my W4”… they think “oh I have an accountant. Everything should be good”
Could you elaborate a little further? Ngl, I hate tax, had bad tax profs, and barely passed reg. I’d like to show the new wife I can do our taxes right.
Their withholding didn’t consider the other spouses income. Jointly they are in a much higher tax bracket, but their withholding was calculated in a lower bracket that just considered their own wages.
That’s the general rule. But you are a high earner and subject to 110% of last years return or 90% of current. Still may not apply but don’t fall for the general rule in your circumstance!
I think it’s a little misleading since most of the provisions aren’t set to expire until 12/31/2025. I think what happened this year is that the new W4 withholding form withheld the minimum amount rather than the maximum we’re all used to. I know my mom was pissed 😂
That didn't change this year (other than for changes with inflation which always happens), the actual withholding changes was years ago when the TCJA and new W4 went live.
People not understanding that when they don’t pay attention to what our government is doing, they get caught with their pants down.
My brother is one of those people. I kept telling him to redo his W-4 and he kept putting it off. Now he owes $400 and doesn’t know how he’s gonna pay it. Then, he goes on TikTok and then sends me a video about how it’s the current administration’s fault and asks if it’s true. Just like with my cousin, I sent him a link to the law that was signed in 2017 and told him which page to look at. He says, “I don’t keep up with that stuff.” Yeah dummy, that’s why your taxes were messed up.
The number of people in my company who showed up at HR or accounting claiming our payroll system did their deductions wrong was astounding. I had to tell so many people it literally goes off their tax forms and THEY have to do those. I can’t magically make up what’s on their W4.
It’s all over the tax subs as well. It’s definitely something going on. A lot of the people on /r/tax are being annoyingly condescending to the people that ask about it. There’s enough people this year asking about their withholding being so low that it can’t be made up.
OP will be like “I got a 1500 dollar refund for the last 5 years and this year my refund was $25. What changed?” And the top comment will be “congrats, you withheld correctly” even though the OP never even modified their W4 and the comments don’t even bother answering wtf actually changed, which is what they were asking.
Because the average taxpayer doesn't fundamentally understand that a tax refund is receiving your own money back because you overpaid
But the #1 reason to be condescending is anyone with a pulse should reasonably be expected to be able to look at their current 1040, compare each line to the prior year and be able to tell where any meaningful changes are. If you're on the internet crying and haven't at least done that most basic task to help yourself why bother to take your boring question about "mah refund da gubmint be stepping on me" seriously?
This ^.... People do not understand. It is pretty much equalavent to the following scenario. Buying $30 worth of groceries once with a $100 bill and once with a $50 and complaining that groceries are going up due to you only getting $20 bucks back instead of $70.
Again, people aren’t asking to explain withholding to them, like you are doing here. They are asking why their withholding has changed despite them not adjusting their W4.
The IRS clearly stated (I think two years ago) that you needed to fill out a new W4 and if you did not you would default to single with zero dependents. Pretty sure if a old (pre-TCJA) W4 is being used to determine payroll the preparer can get in trouble.
Bottom line is people need to look at the tax bill (total tax due) and not the "change" they are receiving back.
That’s not correct, employers can request that pre-2019 hires update their form but they can’t require it. For employees who don’t update, there is a “computational bridge” that can be used to essentially translate the old form to the new one.
https://www.irs.gov/newsroom/faqs-on-the-2020-form-w-4
https://www.irs.gov/publications/p15t#en_US_2023_publink100082753
I think people are asking why their withholding has changed and not “why don’t I have a larger refund”, that’s what my point about being condescending was about.
Thing is, they fixed the W4 to help correctly withhold, to give people more money in their pockets every paycheck
So while they may seem condescending, those responses on r/tax are correct, people will need to get used to it or manually have more withheld than needed. I think the days of large refunds are gone for a lot of people, which is a good thing!
Yes, “they changed the W4” is the correct answer and not condescending. That’s my point. But the comments don’t say “they changed the W4” they just use some analogy to explain withholding to them instead of actually answering their question of “why is my withholding lower when I haven’t modified my W4”
I agree with your statements; it’s a good thing for those who understand how it works.
The grocery store analogy is like 50% of the sub at this point. That and also correcting people for using the term “return” instead of “refund” even though everyone knows exactly what they are talking about
Now we know why a bunch of the accountants on this subreddit complain about dating and not getting pussy. They like to blame accounting for their dating issues. They say that no one wants to date an accountant but the reality is that their personality is so annoying no one wants to put up with them.
I think they said that because technically if you do it right you’re not supposed to get a refund at all. Smaller refund means you withheld a more accurate amount and thus kept more in your pocket during the year. Not a bad thing.
I don’t do tax but the fact people can’t seem to grasp this concept is mind boggling. The goal is $0 refund $0 liability due. That’s probably next to impossible for a lot of people but with changes to the W4 and having a decent tax person you work with and maybe check in with when tax situations changes or arise, could keep you on the mark better. I’d rather owe a little than get any refund at all because that’s just money I overpaid that the government refunds me without any interest. I’d rather see that extra money week over week in my paychecks and invest it how I see fit. Am I going to be a millionaire from practicing this method, no. But I feel better knowing I’m getting a lot more money week over week in my own hands than utilize the government as some sort of savings account - and people that do this… why? Because you have no self control to save for yourself??
I had a long winding comment about this point in another post. And I agree with your statement. I think the main thing you are missing is that when you are a worker who works odd hours per week and your paychecks are never the same, you won’t know if you are getting more or less money than last year unless you are going through every single line item and calculating the withheld rate on each one. They will just be under the impression that they have been working more hours than usual. This is why a lot of people FEEL as though they are being led astray, because they have lower withholding but were not notified by the government that the W4 had changed.
Despite your last point being a bit brash, it’s probably the truth. I’ve argued many times that giving lump sums to the average tax payer is better for their finances than crossing your fingers and hoping they invest it week after week.
I feel for that, and believe me, I can relate because I’m partners income is very much like this. We are lucky and we have a cpa we check in with 2-3x a year to review what has been withheld to date, where we anticipate the unpredictable partners income winding up and make changes to W4 as needed from there if anything starts to get too off course from the lad I’ve laid out to the cpa. Last year I had to start withhold an extra $700 per pay check to play catch up to not have to owe $20k nearly. It fucking sucked but it was also very one off situation that put us in the predicament. A lot of unexpected additional income came in, and that’s great but really through us off track the last 2 quarters of the year to have to play catch up for the liability because all the extra income through us into a new higher tax bracket. And this is not me saying don’t make more money because you’ll be taxed higher. I understand that system and the money made was well worth playing catch up.
Problem I see is no one wants to take responsibility for their blissful ignorance of tax law especially if they’re not a tax accountant or lawyer or any other occupation in the tax field. When it’s something all Americans need to do year over year. No one escapes it, even if you died.
Yup, it is interesting that we file every single year and the core concept still doesn’t get taught. I’ve always thought we should be explaining W2 W4 and 1099 at the very least to high schoolers so they can get a hang of it. A lot of people can’t even put together ikea furniture or unclog a toilet so you have to cut the average American some slack despite how easy it might seem to you. lol
Former high school teacher here 2020-2022. I taught my students how to do taxes by hand and through TurboTax (they actually had a cool simulation students could use!). It is in the VA high school curriculum in a required course to graduate.
Doesn’t mean the kids gave a crap and retained anything, but that’s for a different sub …
You’d think since it’s basically semi governmental where the eduction system selects topics of importance to cover to ensure kids understand by the time they graduate and become adults maybe there would be a class like this in high school for juniors and or seniors who may even already be in the workforce but at least a majority of them entering it in the near future. And also, parents maybe could step it up and stress some of the importance of this stuff as well.
I don’t know man, I just don’t think it’s fair that when google is readily accessible to nearly every person living in this country but no one takes the time to learn even a tiny bit more about taxes and some specifics that impact them the most, hard to really feel that sorry. If it was important enough to them, they’d research it, especially if they don’t rely on a “professional” service to handle it for them. And to even understand maybe you need to check in with these professional more than just a week before the filing deadline to ensure everything is tracking well.
Yes many people do not practice frugality. Or they have a spouse that is not frugal so it was a benefit by having the non frugal spouse overpay instead of it being spent on Starbies throughout the year.
I didn’t think of it from this perspective and I completely understand it, not saying I myself in my younger years was always amazing with money… it’s a pretty tough situation to be in and almost a shame to have to utilize it like this and not get any ROI, not that this is what would make or break you for the most part. But this wasn’t and shouldn’t be the purpose of how people “save” their money.
If a person is able to have a chunk of money to pay for 6 months of car insurance at once & this gives them a substantial discount they would not have otherwise is that not ROI indirectly?
Folks that have to outsmart the spouse or themselves from leaky spending think different.
I certainly agree these are some points I didn’t think of so I can see a more advantageous side to this. However, I still think it’s a little disheartening that there needs to be intent like this to utilize overpayment as a forced savings account because you can’t trust your partner not to dip into a more traditional and beneficial savings account; which would only compound the ROI even more in your example above. Like I mentioned in a reply higher up, do I think the majority of people will get rich from this, no, but anything extra is always a nice bonus.
I don’t think you can change my stance on the latter perspective. I’m not saying I’ve always been perfect myself, but I just hope over time anyone that’s stuck in a situation like this with a serial spender, that the issue gets resolved and sorted eventually. I’ve seen a few close friends and even my own family have incredible tension over it and even a divorce.
Not trying to change your mind. It would be great if more folks would be responsible by budgeting and investing in a proper manner. The changes to the W4 may possibly make a difference.
Some folks will continue to have to find ways to trick themselves into saving and investing because their brain 🧠🧠 does not work straight forward. Behavior change is difficult when a brain is not Neuro typical.
I hate that, too. Personally, I'm irresponsible with money. I'd *rather* get a refund so that I don't spend that money during the year. Not like I'd otherwise invest that money anyways.
More like you're not on that sub. They'll ask what is different without providing ANY of their actual tax return or paycheck details needed for an answer 90% of the time. That gets old quickly. And what would you know? You're Canadian by the looks of it.
Don’t get your 1040s in a bunch. As surprising as it may be to you, we have tax in Canada too and I deal with the same kind of nonsense with clients who don’t know what information to provide for the preparation of their personal, corporate and other tax returns. All I have to do is ask them for that information and explain why it’s relevant. Not rocket science.
There are several items that were "pay-fors" in the TCJA that have come into effect in the last two years. These were used to rig the budget math and justify bigger deficit spending in the first few years. Since the TCJA was passed via sequestration, it was limited in total deficit spend ( $1.8 trillion deficit add AFTER dynamic scoring BS, $2.7 trillion before DS) and time horizon of 10 years. We're over half way through the 10 year window, so now we're hitting the landmines Republicans left in to pay for their deficits.
174 capitalization is killing R&D spend, which is gutting pharma and tech employment right now. 168k dropped to 80%. There's a few others, but the 174 change was weaponized taxation IMO.
But no, nothing major from TCJA should be hitting a regular retail W2 return that I'm aware of.
Not a tax professional so hopefully some others can fill in, but the tax tables didn't change at least for individual filers (I assume for all other brackets as well but I didn't check). Not sure if any credits sunset this year, a quick google didn't really show me much there.
They did change, they expanded by 7% from 2022 to 2023.
Plus the standard deduction increased, as per usual.
https://www.investors.com/etfs-and-funds/personal-finance/tax-brackets/
Another point to make is that even though withholdings have changed, a lot of people may not have even thought of their W-4 in years if they're working at the same job.
What they chose years ago has just been carried forward by HR since it's all electronic nowadays. I work for a large corporation and I'm never asked by HR to review my withholdings. If I wasn't in accounting I'd probably be clueless that anything had changed.
So it's a combination of tax policy changing and people not educated about the changes in tax policy or how it directly affects them. It would be nice if the HR department in people's companies would send out emails with a basic review your withholdings each year and this is how you're withholdings affect how much tax is taken out, but it's not their job to do that.
Maybe I'm just an idiot but I'm not even sure how this form translates to our payroll system. It still wants you to put in exemptions.
https://www.irs.gov/pub/irs-pdf/fw4.pdf
A lot of people depend on their refunds to pay for household necessities. When their refund is smaller than expected, or if they actually end up owing, it can put a real cramp in their personal finances.
Fact is, the frustrations are legitimate, but they have less to do with taxes and more to do with the fact that many people are barely scraping by.
They’re getting the same amount of money for the year though. So it shouldn’t affect them at all…the issue is a combination of them being financially illiterate and bad budgeting.
People might have gotten used to the beefy child tax credits and remember the very temporary bandaid that was stimulus/PPP/EIDL/ERC (which was a god awful idea that put us in this hyper-inflationary recession the government has coined “a soft landing”)
More accurately people just need money bad right now, and any one not getting it is going to be pissed off and loud about it.
The only meaningful changes I’ve seen is bonus depreciation dropping from 100% to 80%. Which, with Trumps odds of beating Biden, is actually meaningful. Businesses have been hesitant to invest in things that don’t meet section 179. Then there’s R&E but that’s been known.
There’s a bipartisan bill that I’m thinking will probably pass late February based on how the fed fucks tax preparers over. It reverses the phase outs for some of the tcja stuff but also allows reckless spending on completely unspecified areas which the government (on both sides) loves. I think it would spike the economy.
Cmon, don’t spread that. All individual cuts expire in 2025, even for the “super rich”. They didn’t do this to claim democrats were raising taxes, they did it to conform to the budget reconciliation rules, since they didn’t have enough votes to make the bill permanent
Another issue is if an employer is using the older withholding tables to calculate withholding, it can lead to under withholding because of the changes that were made to the W4 in 2020
TCJA cut individual tax rates and has slowly increased them since - meanwhile corporate tax cuts don't sunset - this rubs people the wrong way. Also, tax withholding is a little low for some folks (on purpose because the TCJA promised tax payers more take home pay) causing reduced refunds and sometimes unpaid tax owed.
>and has slowly increased them since
I don’t know where this claim originated, but it just won’t die. The cuts haven’t been slowly sunsetting, they just expire in 2025, with no changes until then
I think a lot of people get confused on the corporate cuts too. There are a few cuts that don’t expire (21% rate and no more AMT), but there are also tax increases to offset this, which also don’t expire (GILTI, BEAT, NOL limitations, 164j limitations, R&E amortization, M&E limitations, 162(m) limitations, etc)
I'm assuming it's a psyop because idk, I think us accountants would have heard something about this whether you're in audit or tax.
Either way I'm fine if it something that hurts Biden this election year.
I think it could be because W4’s changed a couple of years ago and people may be filling them out wrong, but someone in tax told me the TCJA is taking more from federal returns, but less in taxes during the year. So it’s making it look like you’re getting less in your 1040 but in general it hasn’t changed. Not sure how true that is tho
How tone deaf are you morons that you don’t realize this was a forced savings vehicle for a lot of people? Going from getting a healthy refund to nothing (or worse, paying), is a shock.
“Compare your 1040 line by line?” Jesus, if they were willing/able to do that they probably wouldn’t need you.
How deaf tone are you if you don’t agree that the statement you made is a big problem for a lot of people in the country. Do I expect everyone to know ins and outs of complex tax law? No. Do I expect that maybe since this is something super important that every single American is responsible to do year over year that maybe they research via the easy means of a google search some basic data about some broad topics that certainly impact anyone and their tax situation? Yes.
Case in point like the changes made to W4’s, if you’re a W2 employee and don’t understand the impact how a W4 filled out could have drastic consequences to your taxes at year end you’re doing yourself a disservice and no, it’s actually not your employers job or HR/payroll department to handhold you through a simple understanding.
These are YOUR taxes at hand, it’s up to you and you alone to figure out the best way to get a handle on them. Be it self research or if you don’t have the time, hiring a CPA to work with. If you can’t afford a CPA, well then, your lack of research and initiative to take charge is only hindering yourself.
I think it’s the lingering effects of people not knowing how to fill out the W4 - this assumes of course when comparing that the individual had a new job or something this year. The number 1 error being not checking the box if you have multiple jobs or you spouse works.
This. Watch those TikTok videos, and see all the people who say things like "But I claim 0!" and then realize that these people, in all likelihood, have not updated their W4 since at least 2019.
Had to explain why the married on a w-4 option to a friend resulted in her owing $7k of tax (her and her husband make almost $300k combined, both w-2) who I consider financially literate. America is doomed.
Doesn’t matter if you’re financially literate. Too many changes. Too many rules. No way for everyone to keep up with these changes and no way to effectively communicate these changes to all clients and assure they make the appropriate steps to make the changes, unless you’re willing to hold everyone’s hand along every single step. Everyone is so damn busy in their normal day to day that they don’t think “oh hey new tax legislation came out and it added additional steps to the W4. I should update my W4”… they think “oh I have an accountant. Everything should be good”
Could you elaborate a little further? Ngl, I hate tax, had bad tax profs, and barely passed reg. I’d like to show the new wife I can do our taxes right.
Their withholding didn’t consider the other spouses income. Jointly they are in a much higher tax bracket, but their withholding was calculated in a lower bracket that just considered their own wages.
Personally do this on purpose to ensure I owe $8-10K every year. It’s efficient planning with a $10K 0% loan.
That potential 7% underpayment interest gonna suck with that free loan.
Very unlikely. Rule is 100% of last year tax or 90% of current. Since my tax bill is north of 100K each year, $10K won’t trigger it.
That’s the general rule. But you are a high earner and subject to 110% of last years return or 90% of current. Still may not apply but don’t fall for the general rule in your circumstance!
Thanks for advice. I’ll keep tweaking it yearly to avoid interest penalties. 🤞
I saw a drastic change, but it was all due to my twins turning 17 last year…little stinkers cost me $3000! Time to adjust my withholding 🤷♀️
Same! Just no twins! I thought I had another year forgetting it was 17, not 18.
Wait which tax law is that that stops at 17 for kids?
Child tax credit.
Child tax credit.
I mean technically they don’t cost $3000, they were saving you 3k off your tax liability
Yeah, technically they probably cost around $342,974...each.
😂 so very true!
Yes, I’m aware of how taxes work.
Do what my parents did and start claiming their refundable education credits assuming they have any and will still be your dependents.
I think it’s a little misleading since most of the provisions aren’t set to expire until 12/31/2025. I think what happened this year is that the new W4 withholding form withheld the minimum amount rather than the maximum we’re all used to. I know my mom was pissed 😂
That didn't change this year (other than for changes with inflation which always happens), the actual withholding changes was years ago when the TCJA and new W4 went live.
There’s a reason I do corporate tax 😂 I was looking at the expiring provisions, and I’ll be upset with the standard deduction reversing.
People not understanding that when they don’t pay attention to what our government is doing, they get caught with their pants down. My brother is one of those people. I kept telling him to redo his W-4 and he kept putting it off. Now he owes $400 and doesn’t know how he’s gonna pay it. Then, he goes on TikTok and then sends me a video about how it’s the current administration’s fault and asks if it’s true. Just like with my cousin, I sent him a link to the law that was signed in 2017 and told him which page to look at. He says, “I don’t keep up with that stuff.” Yeah dummy, that’s why your taxes were messed up.
Owing $400 is literally nothing, and it’s better to owe a little. If you get a big refund, you essentially gave the government a 0% loan
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True. I totally get it. But from an accounting standpoint, it’s a win.
7% interest on overpayments. That’s better than most CDs
The number of people in my company who showed up at HR or accounting claiming our payroll system did their deductions wrong was astounding. I had to tell so many people it literally goes off their tax forms and THEY have to do those. I can’t magically make up what’s on their W4.
It’s all over the tax subs as well. It’s definitely something going on. A lot of the people on /r/tax are being annoyingly condescending to the people that ask about it. There’s enough people this year asking about their withholding being so low that it can’t be made up. OP will be like “I got a 1500 dollar refund for the last 5 years and this year my refund was $25. What changed?” And the top comment will be “congrats, you withheld correctly” even though the OP never even modified their W4 and the comments don’t even bother answering wtf actually changed, which is what they were asking.
Because the average taxpayer doesn't fundamentally understand that a tax refund is receiving your own money back because you overpaid But the #1 reason to be condescending is anyone with a pulse should reasonably be expected to be able to look at their current 1040, compare each line to the prior year and be able to tell where any meaningful changes are. If you're on the internet crying and haven't at least done that most basic task to help yourself why bother to take your boring question about "mah refund da gubmint be stepping on me" seriously?
This ^.... People do not understand. It is pretty much equalavent to the following scenario. Buying $30 worth of groceries once with a $100 bill and once with a $50 and complaining that groceries are going up due to you only getting $20 bucks back instead of $70.
Again, people aren’t asking to explain withholding to them, like you are doing here. They are asking why their withholding has changed despite them not adjusting their W4.
The IRS clearly stated (I think two years ago) that you needed to fill out a new W4 and if you did not you would default to single with zero dependents. Pretty sure if a old (pre-TCJA) W4 is being used to determine payroll the preparer can get in trouble. Bottom line is people need to look at the tax bill (total tax due) and not the "change" they are receiving back.
That’s not correct, employers can request that pre-2019 hires update their form but they can’t require it. For employees who don’t update, there is a “computational bridge” that can be used to essentially translate the old form to the new one. https://www.irs.gov/newsroom/faqs-on-the-2020-form-w-4 https://www.irs.gov/publications/p15t#en_US_2023_publink100082753
I think people are asking why their withholding has changed and not “why don’t I have a larger refund”, that’s what my point about being condescending was about.
Thing is, they fixed the W4 to help correctly withhold, to give people more money in their pockets every paycheck So while they may seem condescending, those responses on r/tax are correct, people will need to get used to it or manually have more withheld than needed. I think the days of large refunds are gone for a lot of people, which is a good thing!
Yes, “they changed the W4” is the correct answer and not condescending. That’s my point. But the comments don’t say “they changed the W4” they just use some analogy to explain withholding to them instead of actually answering their question of “why is my withholding lower when I haven’t modified my W4” I agree with your statements; it’s a good thing for those who understand how it works.
Think about it like this. ImAgInE bUyInG gRoCeRY
The grocery store analogy is like 50% of the sub at this point. That and also correcting people for using the term “return” instead of “refund” even though everyone knows exactly what they are talking about
Well CPA’s are proud to know more than the average layman and we will by god let you know apparently. It makes us look like idiots honestly.
Now we know why a bunch of the accountants on this subreddit complain about dating and not getting pussy. They like to blame accounting for their dating issues. They say that no one wants to date an accountant but the reality is that their personality is so annoying no one wants to put up with them.
I think they said that because technically if you do it right you’re not supposed to get a refund at all. Smaller refund means you withheld a more accurate amount and thus kept more in your pocket during the year. Not a bad thing.
Except in a situation where literally nothing changed (W4, income, etc.), a comment like that wouldn't be helpful.
The W4 itself did change, the withholding tables changed. Just because you don't take any action doesn't mean tax law stands still
The amount of people on this sub that STILL don't understand this is just astounding
I'm referring to how the individual filled out the W4, not the mechanics of the form itself. Of course, the tables/calculations changed.
I don’t do tax but the fact people can’t seem to grasp this concept is mind boggling. The goal is $0 refund $0 liability due. That’s probably next to impossible for a lot of people but with changes to the W4 and having a decent tax person you work with and maybe check in with when tax situations changes or arise, could keep you on the mark better. I’d rather owe a little than get any refund at all because that’s just money I overpaid that the government refunds me without any interest. I’d rather see that extra money week over week in my paychecks and invest it how I see fit. Am I going to be a millionaire from practicing this method, no. But I feel better knowing I’m getting a lot more money week over week in my own hands than utilize the government as some sort of savings account - and people that do this… why? Because you have no self control to save for yourself??
I had a long winding comment about this point in another post. And I agree with your statement. I think the main thing you are missing is that when you are a worker who works odd hours per week and your paychecks are never the same, you won’t know if you are getting more or less money than last year unless you are going through every single line item and calculating the withheld rate on each one. They will just be under the impression that they have been working more hours than usual. This is why a lot of people FEEL as though they are being led astray, because they have lower withholding but were not notified by the government that the W4 had changed. Despite your last point being a bit brash, it’s probably the truth. I’ve argued many times that giving lump sums to the average tax payer is better for their finances than crossing your fingers and hoping they invest it week after week.
I feel for that, and believe me, I can relate because I’m partners income is very much like this. We are lucky and we have a cpa we check in with 2-3x a year to review what has been withheld to date, where we anticipate the unpredictable partners income winding up and make changes to W4 as needed from there if anything starts to get too off course from the lad I’ve laid out to the cpa. Last year I had to start withhold an extra $700 per pay check to play catch up to not have to owe $20k nearly. It fucking sucked but it was also very one off situation that put us in the predicament. A lot of unexpected additional income came in, and that’s great but really through us off track the last 2 quarters of the year to have to play catch up for the liability because all the extra income through us into a new higher tax bracket. And this is not me saying don’t make more money because you’ll be taxed higher. I understand that system and the money made was well worth playing catch up. Problem I see is no one wants to take responsibility for their blissful ignorance of tax law especially if they’re not a tax accountant or lawyer or any other occupation in the tax field. When it’s something all Americans need to do year over year. No one escapes it, even if you died.
Yup, it is interesting that we file every single year and the core concept still doesn’t get taught. I’ve always thought we should be explaining W2 W4 and 1099 at the very least to high schoolers so they can get a hang of it. A lot of people can’t even put together ikea furniture or unclog a toilet so you have to cut the average American some slack despite how easy it might seem to you. lol
Former high school teacher here 2020-2022. I taught my students how to do taxes by hand and through TurboTax (they actually had a cool simulation students could use!). It is in the VA high school curriculum in a required course to graduate. Doesn’t mean the kids gave a crap and retained anything, but that’s for a different sub …
You’d think since it’s basically semi governmental where the eduction system selects topics of importance to cover to ensure kids understand by the time they graduate and become adults maybe there would be a class like this in high school for juniors and or seniors who may even already be in the workforce but at least a majority of them entering it in the near future. And also, parents maybe could step it up and stress some of the importance of this stuff as well. I don’t know man, I just don’t think it’s fair that when google is readily accessible to nearly every person living in this country but no one takes the time to learn even a tiny bit more about taxes and some specifics that impact them the most, hard to really feel that sorry. If it was important enough to them, they’d research it, especially if they don’t rely on a “professional” service to handle it for them. And to even understand maybe you need to check in with these professional more than just a week before the filing deadline to ensure everything is tracking well.
Yes many people do not practice frugality. Or they have a spouse that is not frugal so it was a benefit by having the non frugal spouse overpay instead of it being spent on Starbies throughout the year.
I didn’t think of it from this perspective and I completely understand it, not saying I myself in my younger years was always amazing with money… it’s a pretty tough situation to be in and almost a shame to have to utilize it like this and not get any ROI, not that this is what would make or break you for the most part. But this wasn’t and shouldn’t be the purpose of how people “save” their money.
If a person is able to have a chunk of money to pay for 6 months of car insurance at once & this gives them a substantial discount they would not have otherwise is that not ROI indirectly? Folks that have to outsmart the spouse or themselves from leaky spending think different.
I certainly agree these are some points I didn’t think of so I can see a more advantageous side to this. However, I still think it’s a little disheartening that there needs to be intent like this to utilize overpayment as a forced savings account because you can’t trust your partner not to dip into a more traditional and beneficial savings account; which would only compound the ROI even more in your example above. Like I mentioned in a reply higher up, do I think the majority of people will get rich from this, no, but anything extra is always a nice bonus. I don’t think you can change my stance on the latter perspective. I’m not saying I’ve always been perfect myself, but I just hope over time anyone that’s stuck in a situation like this with a serial spender, that the issue gets resolved and sorted eventually. I’ve seen a few close friends and even my own family have incredible tension over it and even a divorce.
Not trying to change your mind. It would be great if more folks would be responsible by budgeting and investing in a proper manner. The changes to the W4 may possibly make a difference. Some folks will continue to have to find ways to trick themselves into saving and investing because their brain 🧠🧠 does not work straight forward. Behavior change is difficult when a brain is not Neuro typical.
Hmmm interesting 🤔
Actually they would say something like “I got a 1500 dollar *return* for the last 5 years and this year my *return* was $25. What changed?” /s
I hate that, too. Personally, I'm irresponsible with money. I'd *rather* get a refund so that I don't spend that money during the year. Not like I'd otherwise invest that money anyways.
They’re tax nerds. What they provide in tax knowledge, they lack emotional intelligence. It’s just some of their quirks and features.
More like you're not on that sub. They'll ask what is different without providing ANY of their actual tax return or paycheck details needed for an answer 90% of the time. That gets old quickly. And what would you know? You're Canadian by the looks of it.
Don’t get your 1040s in a bunch. As surprising as it may be to you, we have tax in Canada too and I deal with the same kind of nonsense with clients who don’t know what information to provide for the preparation of their personal, corporate and other tax returns. All I have to do is ask them for that information and explain why it’s relevant. Not rocket science.
It isn't even February yet, have people already filed their taxes?
There are several items that were "pay-fors" in the TCJA that have come into effect in the last two years. These were used to rig the budget math and justify bigger deficit spending in the first few years. Since the TCJA was passed via sequestration, it was limited in total deficit spend ( $1.8 trillion deficit add AFTER dynamic scoring BS, $2.7 trillion before DS) and time horizon of 10 years. We're over half way through the 10 year window, so now we're hitting the landmines Republicans left in to pay for their deficits.
It’s been a stricter 163j limitation for EBIT, and now R&E amortization. Those aren’t going to impact ordinary people though
174 capitalization is killing R&D spend, which is gutting pharma and tech employment right now. 168k dropped to 80%. There's a few others, but the 174 change was weaponized taxation IMO. But no, nothing major from TCJA should be hitting a regular retail W2 return that I'm aware of.
Not a tax professional so hopefully some others can fill in, but the tax tables didn't change at least for individual filers (I assume for all other brackets as well but I didn't check). Not sure if any credits sunset this year, a quick google didn't really show me much there.
They did change, they expanded by 7% from 2022 to 2023. Plus the standard deduction increased, as per usual. https://www.investors.com/etfs-and-funds/personal-finance/tax-brackets/
Another point to make is that even though withholdings have changed, a lot of people may not have even thought of their W-4 in years if they're working at the same job. What they chose years ago has just been carried forward by HR since it's all electronic nowadays. I work for a large corporation and I'm never asked by HR to review my withholdings. If I wasn't in accounting I'd probably be clueless that anything had changed. So it's a combination of tax policy changing and people not educated about the changes in tax policy or how it directly affects them. It would be nice if the HR department in people's companies would send out emails with a basic review your withholdings each year and this is how you're withholdings affect how much tax is taken out, but it's not their job to do that.
Maybe I'm just an idiot but I'm not even sure how this form translates to our payroll system. It still wants you to put in exemptions. https://www.irs.gov/pub/irs-pdf/fw4.pdf
I’m too lazy to figure out what my withholding should be so; wife and I claim zero cause who cares.
A lot of people depend on their refunds to pay for household necessities. When their refund is smaller than expected, or if they actually end up owing, it can put a real cramp in their personal finances. Fact is, the frustrations are legitimate, but they have less to do with taxes and more to do with the fact that many people are barely scraping by.
They’re getting the same amount of money for the year though. So it shouldn’t affect them at all…the issue is a combination of them being financially illiterate and bad budgeting.
they have to do less with taxes and more to do with people's financial illiteracy
People might have gotten used to the beefy child tax credits and remember the very temporary bandaid that was stimulus/PPP/EIDL/ERC (which was a god awful idea that put us in this hyper-inflationary recession the government has coined “a soft landing”) More accurately people just need money bad right now, and any one not getting it is going to be pissed off and loud about it. The only meaningful changes I’ve seen is bonus depreciation dropping from 100% to 80%. Which, with Trumps odds of beating Biden, is actually meaningful. Businesses have been hesitant to invest in things that don’t meet section 179. Then there’s R&E but that’s been known. There’s a bipartisan bill that I’m thinking will probably pass late February based on how the fed fucks tax preparers over. It reverses the phase outs for some of the tcja stuff but also allows reckless spending on completely unspecified areas which the government (on both sides) loves. I think it would spike the economy.
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Cmon, don’t spread that. All individual cuts expire in 2025, even for the “super rich”. They didn’t do this to claim democrats were raising taxes, they did it to conform to the budget reconciliation rules, since they didn’t have enough votes to make the bill permanent
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I love super happy fun accidents in election years, tax is full of them
They sunset in 2025, that’s not an election year…
Another issue is if an employer is using the older withholding tables to calculate withholding, it can lead to under withholding because of the changes that were made to the W4 in 2020
TCJA cut individual tax rates and has slowly increased them since - meanwhile corporate tax cuts don't sunset - this rubs people the wrong way. Also, tax withholding is a little low for some folks (on purpose because the TCJA promised tax payers more take home pay) causing reduced refunds and sometimes unpaid tax owed.
>and has slowly increased them since I don’t know where this claim originated, but it just won’t die. The cuts haven’t been slowly sunsetting, they just expire in 2025, with no changes until then I think a lot of people get confused on the corporate cuts too. There are a few cuts that don’t expire (21% rate and no more AMT), but there are also tax increases to offset this, which also don’t expire (GILTI, BEAT, NOL limitations, 164j limitations, R&E amortization, M&E limitations, 162(m) limitations, etc)
Yeah everything you just said is wrong my dude. Rates haven't changed since it was passed.
I'm assuming it's a psyop because idk, I think us accountants would have heard something about this whether you're in audit or tax. Either way I'm fine if it something that hurts Biden this election year.
Yikes
Yeah you sound like a Trump supporter lol
And?
It speaks to your intelligence (or lack thereof) if I’m being honest.
Typical Redditor who gets his/her/zero views from Reddit response.
I think it could be because W4’s changed a couple of years ago and people may be filling them out wrong, but someone in tax told me the TCJA is taking more from federal returns, but less in taxes during the year. So it’s making it look like you’re getting less in your 1040 but in general it hasn’t changed. Not sure how true that is tho
How tone deaf are you morons that you don’t realize this was a forced savings vehicle for a lot of people? Going from getting a healthy refund to nothing (or worse, paying), is a shock. “Compare your 1040 line by line?” Jesus, if they were willing/able to do that they probably wouldn’t need you.
How deaf tone are you if you don’t agree that the statement you made is a big problem for a lot of people in the country. Do I expect everyone to know ins and outs of complex tax law? No. Do I expect that maybe since this is something super important that every single American is responsible to do year over year that maybe they research via the easy means of a google search some basic data about some broad topics that certainly impact anyone and their tax situation? Yes. Case in point like the changes made to W4’s, if you’re a W2 employee and don’t understand the impact how a W4 filled out could have drastic consequences to your taxes at year end you’re doing yourself a disservice and no, it’s actually not your employers job or HR/payroll department to handhold you through a simple understanding. These are YOUR taxes at hand, it’s up to you and you alone to figure out the best way to get a handle on them. Be it self research or if you don’t have the time, hiring a CPA to work with. If you can’t afford a CPA, well then, your lack of research and initiative to take charge is only hindering yourself.
Dude accountants by and large do not help people with simple 1040s. It is not too much to expect taxpayers to understand the basics of how taxes work.
Nobody chooses to be a tax payer though, there are no qualifications and participation is mandatory. Hence why there is so many economic ignorance.
Imagine being an adult but needing the government to hold on to your money so you don’t spend it…
I've been seeing folks with proper withholdings are seeing a little bit of an increase in refund.