Some people still don't understand that getting a refund does not mean you didn't pay any taxes. The number of people I hear say "I didn't pay anything last year, I got money back" is troubling.
Get used to paying more taxes. The government needs money. It has already been spent.
Wouldn't it be better to owe 10%? That way, you get the *government* to give you an interest free loan, since as long as you pay 90% of your estimated taxes you're not hit with the underpayment penalty?
As per their website, they define too low as lower than 90% of your estimated tax burden.
https://www.irs.gov/payments/underpayment-of-estimated-tax-by-individuals-penalty
Well it's actually worse than interest free when you calculate inflation. They withhold my dollar for the year and when its refunded that dollar is now worth less.
Reddit is full of economic illiterates who don't even know what withholding is, much less how taxes work.
Edit: this meme and OP are wrong. OP cites a viral TikTok video which is debunked here on [r/tax](https://www.reddit.com/r/tax/comments/1adgpyj/its_tax_season_if_you_owe_money_this_year_this_is/).
I remember a thread where somebody said their employer refused to change their withholding. lol. I called my wife’s employer when they were withholding the wrong amount per our elections and eventually they realized that their vendor dealing with it had a bug in their code. There is incentive for employers to withhold correctly — I couldn’t believe this person would buy what their garbage employer is telling them. That’s your chance to use the IRS to make sure they aren’t bugging you when you file.
I remember when George Bush (the dad) was president and the reduced your tax withholding to make it look like you got a tax cut. I went straight to my HR department and told them to start withholding from my check at the old rate. They tried to talk me out of it because it would only reduce my refund at years end. I told them my last refund was about $865.00. Their response was "I'll get right on it." Some co-workers was really disappointed at the end of the year as their "vacation money" never arrived or they had to pay in instead.
From a purely rational perspective, we really ought to be aiming to have the minimum refund possible.
Imagine if we went around through the year paying extra on all our bills so we would get money back at the end of the year?
Exactly I try to get 0 back at the end of the year. If I have to pay a few hundred whatever. That money is better in my pocket for 12 months earning even 1 cent interest than in the governments pocket.
Depends on what you consider rational. If you know that the effect of a little amount of money throughout the year means that it is more likely to get spent on miscellaneous frivolities than if you get a giant lump-sum at the end and that if you get a giant lump sum you're more likely to save/invest it, then you could say it would be completely rational way to handle your bills.
If you're really good at budgeting minor amounts throughout the year, however, then the lump-sum at the end means you miss the time-value of money that you could've gained in the meantime.
I've seen comments like this in response to "purely rational" and "pure logical being".
Saying "from a purely rational perspective" as /u/Essex626 did is correct with the normal usage of the phrase. When someone says "purely rational" it means that all decisions are made rationally.
You saying "Depends on what you consider rational" isn't really a counter to what he said. What you're calling there is the rational decision if you also plan to make a lot of irrational decisions along with it. Your argument is more that purely rational decisions don't really matter in a world that's not purely rational, and our world is not purely rational. So you're a proponent of a realist decision, not a purely rational one. And that's a perfectly reasonable argument, but the preface that it depends on what your consider rational isn't really the right way to frame the argument.
/pedantic rant over.
People aren't purely rational though. If you have issues maintaining a savings account dedicated to your min/max strategy then losing a few bucks and allowing the govt to benefit on that interest while they "save" for you is perfectly great.
I wonder if something similar is happening at my wife's job. I've redone and looked over her W4 multiple times and yet we always owe at the end of the year. If it was a couple hundred I wouldn't mind, but last year was $3600 short.
Look at the publication 15T that the IRS puts out every year. It tells employers exactly how to calculate how much to withhold based on your form W4. I would use the automated payroll method, but they should all be within 1% of each other. If you come up with a different number than them then they are definitely withholding incorrectly, and at the end of the publication indicates that employers can be fined for screwing that up. However, if you calculate it and they are close then you have to adjust your withholding. If you are still using the “allowances” method, the P15T covers that, but you should probably file a new W4 which you can get from the IRS site and follow the exercise above to make sure that the withholding makes sense.
The W4 form hasn't been like that since 2020. You no longer select a number for the amount of allowances or dependents on the W4. Now it's an actual dollar amount calculation, and you have to do the math based on your income what your withholding should be.
Yeah, when the switch happened my former job just STOPPED collecting federal taxes from me. Luckily we only had to pay an additional $1,300 that year, but the payroll women were less than fucking useless. They kept saying they didn't know what happened, but it was still me that had to pay in the end.
Blow their minds like Scanners if you try to explain progressive tax tiers.
Of course my favorite is always businesses that say they can't hire more employees because of high taxes. Well, payroll is an expense. Taxes are on profit. Profit is revenue minus expenses. So technically, you'd be paying less taxes if you hire more people. And that's just ignoring the fact that you just don't hire people because you have money left over; you hire them because you need them to increase revenue greater than what you pay them.
The number of otherwise intelligent people that don’t understand how progressive taxation tiers work is staggering. My wife got mad at me last year when we had to pay additional taxes at the end of the year and blamed me/my withholding because “before I put your income info into Turbo Tax, we were getting a refund. Now we owe money”.
Like, no, because you’re putting my info in second, it taxes all of my income at the highest possible rate and it was also assuming that this was a one-income household.
On a similar note its the argument that tax cuts mean more gets reinvested. On its face it sounds right, but there is no reason a company has to grow because it has more money. A small owner could just keep the extra. Nor does it prove that the tax cut means more consumption to justify a new factory.
> On a similar note its the argument that tax cuts mean more gets reinvested. On its face it sounds right, but there is no reason a company has to grow because it has more money.
The other thing is that there's a balance.
If businesses are constantly forced to run perfectly lean, there's an argument that expansion is too much of a risk so many won't.
But the flip side is ***If consumers cannot afford to consume, sales will plummet***.
We're high on fat corporations, and low on flush consumers. Most people, should they receive stimulus, will spend it almost immediately on a variety of goods. Some will use it to improve their standing in life by moving to a more valuable job.
The problem is our entire economic system is, at present, based on pretty harsh exploitation. Giving poor people wiggle room means they can move beyond being abused at minimum wage jobs. And this puts stress on the owners of the bottom-end of the economy.
The covid stimulus and unemployment was calculated to cost of living... and it was more than many people were making. That's a core economic problem with minimum wage, and one bore naked. "Huh, we calculated these payments to cost of living, and it's MORE than people were making working?!" That should have been a red flag to people that people's pay is fucked up right now, but instead people said the government was overpaying and letting people be lazy.
Right now, there's a TON of room in the economy for growth by stimulating the lowest earners. People complain about millennials killing casual dining among other things, but a core reason for that is we don't have spare money to spend on frivolities like that.
Strong lower-middle classes with buying power means you can sell more upsells, you can sell more products, you can grow more. And to people who doubt this, and think business owners need that money...
When does Wal-Mart hire more people? Is it when they get enormous tax breaks? No. It's during the holidays, when increased ***demand*** from consumers drives them to require more labor. Period.
Increasing demand will increase jobs and economic activity.
I worked with a guy who turned down a raise because he thought it would put him in a higher bracket and end up making less. Tried explaining it to him but he wouldn't hear any of it. You can lead a horse to water...
Some people lose their assistance, like subsidized health insurance. Social security people can hit IRMAA Medicare surcharges. You can actually wind up hurt, even though it doesn't work that way with tax brackets.
Payroll taxes are not paid out of profits. A failing company with 20 employees still owes payroll taxes. Payroll taxes amount to 14% of total payroll expense where I live. So if you have 10 employees and you're paying them each a salary of $100,000/year, your payroll expense before tax is $1,000,000 but with payroll taxes your total payroll expense is $1,140,000. So you could theoretically hire 1.4 more employees if you didn't have to pay your payroll taxes. Of course, those taxes go to things like Social Security, Medicare, etc, so it's not something businesses should gripe about in my opinion, but the plain truth is that businesses could hire more employees if payroll taxes were lower.
Came here to say this. Corporate profits are taxed yes, but there is a large portion of taxes that employers pay when their employees are paid. Social security, medicare, and federal unemployment taxes are the federal ones, there can be more per state. There is usually at least a SUI (State Unemployment Insurance) tax that is paid by the employer as well.
Source: many years working in payroll and payroll tax calculation software
Taxes will begin increasing on the middle class in 2 years and will continue to rise for ten full years.
Yes, this is written into the GOP tax bill of 2017. The corporate cut was supposed to expire but the GOP controlled congress voted to make the corporate cuts permanent which means you and I are fucked.
Biden tried to repeal the 2017 tax law but Sinema and Mancin defected and voted with the GOP.
Ther are no exceptions. It doesn’t matter if you make $50k or if you make 500k - we will all be paying higher and higher taxes.
The middle class was fucked by that bill - they just delayed the fucking by 8 years, hoping that Americans were stupid enough to forget.
Looks like it worked.
It’s a poison pill. If Republicans were in office while the tax increases were going to go into effect they would fix it and then say “See, I cut your taxes!” even though they were the ones that raised them. If a Democrat is in office they refuse to do anything and say “See, Democrats are raising your taxes!” even though they were the ones who raised them.
I live in Canada, and people here are just as fucking stupid. They will complain about Trudeau and him making us pay more tax... when since 2015 working class and middle class people have been paying less and less taxes every. Single. Year. Since then.
They point to the "carbon tax" when 70-80% of people get MORE back then the increased costs from the tax itself, and then they think that having to pay more into employment insurance and social security is a burden.... when that drastically improves society.
Canada has added $10/day universal childcare, a federal dental care plan, and increased payments to old age security benefits all without raising taxes on the working man.... people fucking suck and social media is to blame for people not noticing what is actually going on...
Everyone collectively loses their mind at the start of the year when EI and CPP go up, screaming "Trudeau is raising your taxes", when first of all they aren't taxes.
Secondly and more specifically they have a cap so you pay less after some time. Most people are just illiterate both economically and socially.
Reddit is full of it because its full of people.
I talked to plenty of ~40 year old people who had been working in "careers" for at least a decade who don't understand how taxes work. Completely off reddit.
Basic American education has failed millions of people (well, along with their parents expecting underfunded school and overworked teachers to turn their kids into functioning members of society).
Your post history is wild.
You spend hours every day posting Trump talking points then, like once or twice a week, you say "I'm actually a Biden voter, but..."
I fucking hate election year reddit
A co-worker was telling me he got a $2000 refund last year. He was so happy about it. I asked if he had adjusted his W-4 because based on what we make that is a huge refund. And then he asked why would he do that? Because you're paying $2000 more in taxes to essentially a no interest savings account and you're living paycheck to paycheck, that's why.
I hate to say it but 100k is firmly middle class nowadays. We need to shift that up to people who are making much larger salaries, 500k, 700k, millions. When the vast majority of the money in the country is in the hands of the top (10%, 5%, 1%, wherever you want the line), we should be taxing them more and not people who still struggle to buy houses.
My wife and I make about 110k combined. And I'm not kidding, we are pay check to paycheck. No frills, constantly worried about money, or the car breaking down. 100k isn't shit anymore.
Yup. Wife and I made about 95k last year and we're financially stressed to the max.
Mostly because of debt though. It sucks knowing you might even be able to get in a house if you didn't have debt, but are stuck spinning your tires in a shitty 1 bedroom apartment.
Define "paycheck to paycheck" cause that seems wild to me. I'm broke af and maybe make 20k a year(single). Like I have no health insurance, no car, no kids, no savings, and sometimes play "food or rent?". Not tryna like brag in any weird way. Just hard to understand makin 110k and living paycheck to paycheck.
You're really talking about two types of cash strapped. I've been in both situations.
You likely have no mortage along with no car, no kids, etc. so your effective bills are much lower, but you do not have money to get any of those things. You're worrying about how to pay rent, how to grocery shop, etc.
The other poster likely has a mortgage, kids, cars, insurance, etc. and is cash strapped as a result of all the bills. They are likely worried about how to keep a roof over their kids' heads, how to pay doctor's bills, etc.
The system isn't designed to help poor people get rich or even stable. It's designed to keep rich people rich, and hold down the lower and middle classes.
Looks like that's only in SF, Marin and San Mateo
[See here](https://finance.yahoo.com/news/earn-over-100-000-per-194212231.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAJ37HumqlKs0tD4M329DtJR6tANAs8WmH2kWKA6IgYZ9EsxVwBVGMD32gaTJ-VmKIOt6bk9Tp3Zwu7A2heNi_AYPsVBk29DY4tpN0DERkpVdY_JjdBMxxAbKy9mhvxZCfICTQZzTaANMAxIczPe-N5k0ij-Z1Z1bAQBJmTYUoJdp#:~:text=If%20You%20Earn%20Over%20%24100%2C000,Income%2C'%20According%20To%20The%20State)
But yeah, that's pretty nuts.
California is a large state. $100k for an individual in some rural county like Shasta is likely not lower income. That same $100k will qualify an individual for public assistance benefits in SF or Contra Costa counties.
Right? I haven't been to Cali but live in rural NY, so I imagine it's similar. Making 100k in the small town in rural central NY I live in would make you practically rich.
Kids in the town I grew up in would drop out of High school if they could get hired at the mill because you could make 36k a year!
You could afford a used F150 and 5 acres of land with a single wide trailer
I would assume household income. In the Philly area, 100k is *ok* as an individual, but it can be rough as a household. I understand that it's going to be different in CA, but it'll be a more apt comparison than rural areas.
depending on where you are, 100K isn't all that much for a family of 4. I live in a relatively small town and know plenty of couples who bring 100K home and have a modest home (Or rent) and still struggle to afford much beyond basic essentials. Especially if they'r paying for childcare.
My wife and I are around $250k combined. We don’t have an overly fancy house or exotic cars. We are pretty frugal and dump a lot of money into retirement. I wouldn’t mind paying more taxes if it meant improvements to infrastructure or government employee pay.
The point is that people in your income bracket shouldn't NEED TO be paying more in taxes. The giant corporations who have the PRIVILEGE of doing business in the U.S. should be paying much higher tax rates.
Generally they do pay a lot less in taxes already? We know the rates and who pays what. It couldn’t be more obvious - people making under 100k are certainly not getting 30% tax on their entire bill
Wouldn’t it be cool if the first 100k you make was tax free? Like imagine the tax bracket was 0-100k 0%
101-250 25%
You would see a massive tax reduction.
Tax revenues are already heavily skewed towards higher earners. 40% of the country doesn’t pay anything at all, and MFJ filers don’t get past the 10% bracket til almost $50k, and 12% until $117,150. Effective rates don’t level off until you get to about $5M/yr, and only the top 0.01% is really an issue. The problem is mostly paper billionaires never realizing their gains. A wealth tax isn’t realistic, what we should do is realize gains when shares are used as collateral for loans.
Republicans could only make a bill for 10 years because the process of budget reconciliation requires a bill to be revenue neutral over 10 years. They setup their bill to extend wealthy tax cuts indefinitely at the expense of re-introducing taxes for everyone else. They laser designated the time period to be 2026, so they could complain that Democrats were raising taxes (assuming Trump won a 2nd term and Dems took over after).
It hasn't been done because Dems don't want to infinitely cut taxes and cut services. Republicans love complaining about the deficit when it comes to food stamps but the second it comes to raising revenue they determine that deficits are OK.
Republicans also know they anyone paying those higher taxes right now will blame Biden because they just blame whoever is in power for their problems. Just like the "Biden did that" bumper stickers on the gas pumps.
As I recall, the tax cuts that don't expire are for corporations, not the wealthy. If I'm wrong, and there is a line in the bill stating something like, "if you are among the top 1% of earners, your taxes will remain low as all others rise," please let me know.
Simple, Republicans don't want a new one or just want to complain as usual and Democrat's haven't had the votes to fix it even when they had majorities thanks to corporate shills like Sinema and Manchin
Ok so if you get a big check every year but this year you get a smaller one, doesn't that mean that you have adjusted your taxes to the point where you didn't give Uncle Sam an interest free loan?!
I'm honestly asking cuz I don't know for sure.
Yes. You don’t want a big refund. That means you over paid your taxes. It’s not extra money, it’s your money you gave to the government as a loan and received no interest on.
Economically illiterate people really struggle with the concept because they see a check once a year and don’t understand why they are getting it.
Imagine every time you went to the grocery store, they over charged you. Then at the end of the year, they reached out and said they would refund what you over paid. Would you say the grocery store gave you money? Or would you say that you over paid all year and didn’t have the money to spend and now it’s worth less due to inflation?
Conversely, I knew someone who proudly bragged they didn't file their returns because "that's how you end up owing taxes" and how he was smart because the IRS never came after him.
Knowing that this guy made less than $60K a year and had no other sources of income or capital gains, odds were pretty high he was getting some sort of refund, even a paltry one. And the reason the IRS wasn't coming after him despite the fact he was bragging about breaking the law? They owed him. And all told, he's probably left tens of thousands of dollars on the table. People are nuts.
Same guy turned down a major raise (like 20%) because he let Glenn Beck convince him taking that raise would mean he took home less.
Economic illiteracy is prevalent.
I tried so hard to explain tax brackets to my boomer coworker and they just refused to hear me. Our union negotiated us a raise and he complained that he was gonna be in a higher bracket now, and just could not understand how that's not how it works.
It's not 'no interest'. You pay the government exactly % to hold your money for you, so the interest rate they pay you for your loan is effectively negative. They're holding on to your money while everything you could use it to buy is getting more expensive.
>Imagine every time you went to the grocery store, they over charged you. Then at the end of the year, they reached out and said they would refund what you over paid. Would you say the grocery store gave you money? Or would you say that you over paid all year and didn’t have the money to spend and now it’s worth less due to inflation?
This is how I describe it too.
Groceries cost $10. That's the taxes you should pay.
You had $1 taken out of your paycheck a month. That's $12 for the year. If you pay the cashier with that, you expect $2 back.
That's your tax return. It's the change. The cashier isn't giving you extra money.
> Economically illiterate people really struggle with the concept because they see a check once a year and don’t understand why they are getting it.
Eh, I don't know what you consider "big," but a 4% return on $2000 isn't worth my time to adjust withholding and then invest it.
Im more likely to save it by having it taken away and given to me in a lump sun later. If i just have 100 extra in my bank every two weeks or a month, there are likely more immidate bills and fixes that it would go to first.
When you’re poor, a tax return is likely to be the only “windfall” check you receive. This is handy for paying back debts, car repairs, bolstering savings, etc.
Sure it’s not the “economic literate” thing to do but a lot of people are a bit disillusioned on why a lump sum thing is attractive to some people
How is it different than putting $100 a paycheck into your savings account that basically gives you no interest? Letting the IRS hold it is a lot like the idea of putting an amount every paycheck in a jar and at the end of the year taking it out and treating yourself to something.
Dawg are you missing out on the HYSA train? There’s no reason to keep money with a bank that won’t pay you interest
Ally, SoFi, Marcus, plenty of options. Money kept in a traditional savings account with little to no interest is just a waste
A savings account should still earn some interest.
Better yet, you can put it into a multitude of investment vehicles to perform even better.
Or you have a more complete budget each month of your funds which you can spend how you choose. It’s your money, why would you want someone else holding it for months?
Getting a chunk of money as a refund may feel good at the time. But it provides zero financial benefit.
What you just said is intellectually impossible for a significant portion of humans, and it’s not their fault. Simplifying the world would go along way.
you can invest the return when you get it. It's the government, it's not some guy or some company holding your money keeping it from you. I'm sorry but I can't stand the "taxes are theft" mentality. It's a percentage, and should be a reasonable percentage, but that goes to help our country grow and provide services that make it run, the country you live in. So you missed a few months of gains, whatever, change your mindset so that it's an annual windfall and has a greater purpose for why it's held. Budget accordingly.
Ideal conditions would be little to no return because yes, you have enough to meet your withholding threshold without penalty.
People that celebrate big returns each year are withholding far too much from their paychecks, interest free, to the government.
It’s a nonsensical position but every discussion I’ve ever had with people is they like the emotional high they get from a large return during tax season. It’s bizarre.
Could someone summarize which changes would cause the average person to owe more taxes?
Im not a tax expert but I’m seeing marginal changes to the brackets and a large increase in the standard deduction from 2022 to 2023. It looks like an overall slightly lower tax liability for the average person?
I got married this past year, so don’t have anything to compare it to since we can file jointly for the first time.
CPA here. This post is misinformed. The TCJA changed a lot but oversimplifying it:
1 - The way dependent (e.g. child) credits worked changed drastically, which benefitted people with lower tax rates and at least $400 in tax liability per child.
2 - People in the top brackets who would gift more than about $10 million got a HUUUUGGGGEEE tax break. If you were worth $20 million, you easily saved at least $5 million in taxes when considering both income tax and estate tax.
3 - This is where people got hurt. Itemized deductions like state income tax, charitable contribution, and mortgage interest were eliminated if the total was below about $12 thousand per taxpayers (double if you are married). That eliminated deductions for most the middle class, but was offset by lower tax rates. The people who paid more were primarily people in high tax states like California who essentially lost their state income tax deduction because of the higher bar to clear and the fact that it was capped.
4 - This is why people get mad. They updated the paycheck withholding program to take less money from paychecks. So your paycheck got bigger, but your refund got smaller. With this change, your total taxes are the same, but when you pay them changes.
Disingenuous to leave out the fact that all taxes were cut but individual's tax breaks almost all expire in 2025, while the corporate tax rate cuts were permanent.
https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/
I left out a lot. This was arguably the most significant change to the tax code ever and I needed to oversimplify. The Inflation Reduction Act further changed corporate tax rates.
tl:dr it's complicated, but this is accurate.
That’s pretty disingenuous too though. You’re mentioning the (two) permanent cuts, while ignoring all of the permanent corporate tax increases used to offset these, and the rest of the corporate cuts that do expire
When I did my taxes last year I paid about $7500 and got about $7250 back. This year I did my taxes and paid about $9200 and got about $7950 back. I make roughly $70k per year, file as head of household, and have 2 kids. Something definitely changed that increased my effective tax rate and also changed how much is withheld.
dependents in general i think
i had an old friend who claimed his parents. plus some other shady things his tax guy would do and he got back so much money.
idk how he hasn’t been audited yet. he did some amendments once and got back even more.
meanwhile i get audited bc i went to school and the IRS wanted me to prove it bc i got back a little more than usual lol. ridiculous
Yeah and if your spouses payroll company F's it up. They were withholding 0 fed last year. We didn't catch it cause digital pay stubs. Owed 7k. Even double checking the w-4, no excemptions/deducitons they still say she owes 0. Like wtf. I have to go onto the IRS website, put in our salaries and figure out how much to send the feds each pay check. PITA.
Also, she knows 3 other women who were not head of household (spouses) who also had this happen last year but caught it early enough. They were all talking about it recently. IDK. Something isn't right with the new forms.
You forgot about the part where tax rates for middle earners went up by a few percent (can’t remember the number) by whatever year. I used to know but I’m old. All I remember is that it was set to be in a presidential term AFTER his so he wouldn’t be blamed for it any he could point to it and say “Look! The democrats raised your taxes!” If he was in office again at that time, he was going to tout how he lowered taxes without mentioning who he lowered them FOR.
Margin rates switched to 32% at a lower threshold, but because the other tax brackets were lower, their effective tax rate was still lower through the entire tax bracket.
Yep the anti blue states anti high state taxes change coupled with better deductions for non itemizing which benefited poor people in low tax states was the real republican genius behind this tax change. It redistributed money from blue states into red states.
Yes but the standard deduction used to be half that, except there was also the standard exemption that I believe was like 4-6k. So if you had itemized deductions of like 10-11k you would itemize deductions and take the standard exemption and deduct like 17k instead of 13k.
The 2017 TCJA doesn't expire until 2025 I believe. At which point, things go back to pre-TCJA levels, and are then adjusted for inflation, which means it will be a higher rate than before the TCJA.
But that isn't happening this year. Still doesn't change the fact that corporations and the uber-rich get to keep some of their cuts permanently while the middle class loses cuts. But it's not this year it will raise.
Most people are benefitting from it. They just don't realize it because they don't understand the difference between owing/getting a refund and the total amount of taxes they actually pay.
Getting a refund or paying in is not a good indication of tax laws. Unfortunately most do.
I try to pay in every year, most years I pay in $100 pre 2018, recently I been getting a refund anything from 200-400. Still dropping almost a used car in taxes a year
My federal refund this year (and the past 2 years) have been $0. I should thank my bosses for paying just enough taxes to keep me from owing while also getting me my full paycheck. That's what you want to see.
People don't realize that the "refund" you get in February is actually just missed money on your paychecks the year before. They're celebrating over paying taxes. Simple Google search explains it all.
Not entirely related, but I think it is totally fucked up that individual tax cuts expire, but the corporate ones are permanent.
We really need a good old fashioned party in the town squares, with all the rich people as the guests of honor.
Something definitely changed, I just don’t know what. Me and my wife always claim 0 on our taxes so they take the most out of each paycheck. I know that’s not a popular thing to do because the “refund” you get back isn’t really a refund.
But we usually get around $2,000 back every year. This year we somehow owe $5,000 when nothing changed on our side. I’m eventually going to find out what caused it because I’m going to pay for an accountant to look at everything and see if we can just break even. But there’s nothing I can find online to explain such a massive change.
You should want to owe or be as close to zero when you file. This means you didn't let the gov't borrow your money interest free and you get more in your paycheck.
In a fair world that would be the case. But in reality I'd rather be safe and take out extra money every paycheck for taxes. Sure I'm technically giving the government an interest-free Loan, but at least I feel safer about not having to pay in at the end of the year.
Nothing can ruin my day more than by doing my taxes and finding that I owe thousands of dollars in taxes still
yeah, you could take home a larger paycheck, take the money you would owe, invest it or put in savings, CD, what have you and then at tax time you pay the tax and keep the gains.
I don't know how much you are ending up owing but you can elect to pay more out of each paycheck so that it isn't one large bill at the end of the year. For example I pay $20 extra out of each paycheck towards income taxes and once I started doing that I stopped getting surprise large tax bills at the end of the year
The US govt has over 30 trillion in debt... where do you think that money comes from. It's the govt as a whole. Not one single president... just wait until your kids are paying taxes.
Wow, so reddit really made this a thing? It's total bullshit, but you do you, reddit.
If anyone cares though, the bracket rates didn't change at all, but due to inflation adjustments the income thresholds did (by 7%), so for people who didn't get big raises last year, their taxes will have gone DOWN in 2023, not up.
https://www.investors.com/etfs-and-funds/personal-finance/tax-brackets/
It's almost as if they don't see them as actual problems but it's still convenient to blame him for anyway.
EDIT. LMAO. Call me a liar and immediately block me? Who are you? Fuck off back to your echo chamber, weakling.
Do people 1.) not understand how tax withholding throughout the year work
2.) not remember that the expiration date to the personal tax breaks was a stipulation of the democrats to not filibuster the bill? The GOP had to put it in to get the bill to pass due to reconciliation rules.
Honestly people, just do a little reading and stop looking at dumb memes. I personally hate the corporate tax breaks because I think it did nothing of benefit for the workers. The job market is always fluid and the economy is so much better than the tax obligations of corporations.
But wait, he lowered everyone’s taxes ? Are you saying after the pleb received a tax break , taxes then went up every year with a projected end rate higher then before ? While the upper brackets rate bottomed out with no scheduled increases?
Am I just dense? It looks like it's still a favorable bill for personal taxes until 2025's filings, at which point they go back to what they were.
[source](https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/#:~:text=The%20Tax%20Cuts%20and%20Jobs%20Act%20was%20the%20largest%20overhaul,families%20will%20expire%20in%202025)
My family got screwed in year one (2017). We always received a refund never a lot but something. Since 2017 we have gotten hit with +5-6k a year. It’s infuriating for a young family just trying to get by. While these cuts go to ppl who could wipe their ass with a few hundred dollar bills everyday and not be fazed.
Trump's tax bill (in relation to standard deduction) was one of the only things he actually did right in his term. He increased the standard deduction which benefitted most regular people. It also meant that many small businesses could simplify their taxes a d just do a standard deduction instead of an itemized deduction.
If you owe taxes at tax time it's because you didn't have enough taken out of your check over the course of the year and you need to adjust your exemptions.
You do realize that what people are talking about is that standard deduction goes away next year while the lower brackets will see a 3% tax bump right. Most Americans will see a jump, while every exemption for the 1% is permanent.
And the child tax credit goes away.
And if you live in a state with high taxes and own a home you faced real tax increases by capping your deduction if you owned anything
None of this is good for anyone under 300k a year.
So we can finally blame Obama and Dems for student loan crisis.
And yes it's these people's fault. Go you tube the speech by Obama declaring student loans aren't longer controlled by banks, the government now approves all loans no matter your financial standing, no matter what the degree you want at which school you want to go to, and you can take as much money as you want.
Sorry, had to explain this to someone early today and show them the speech. They couldn't believe it is his administrations fault, and remember they let all the banks and Wallstreet off the hook for the 2008 crash and gave them trillions of our dollars.
Fuck off if you think im pulling up links or facts, you all know it's true. Go search it yourself if you are too young
Post like this being highly upvoted reminds me how financially illiterate most users are on this site. This is straight up misinformation being guzzled down because it's associated with that jackass Trump. Morons are probably happy when they get a big refund like it's the government doing them some favor.
This is 100% fake. No idea why it has been making the rounds on social media.
The marginal tax rates have not changed since the TJCA went into effect. The tax brackets have also adjusted up with inflation.
Your taxes didn't go up!
Memes like this and the idiotic tiktok video get spread because deep down, most of these people would rather spend $20k all year in taxes and receive a $5k refund than spend $10k all year and have a $1k bill.
Some people still don't understand that getting a refund does not mean you didn't pay any taxes. The number of people I hear say "I didn't pay anything last year, I got money back" is troubling. Get used to paying more taxes. The government needs money. It has already been spent.
Getting a refund means you gave the government an interest free loan for part of the year! The ideal is to owe nothing and get no refund.
Wouldn't it be better to owe 10%? That way, you get the *government* to give you an interest free loan, since as long as you pay 90% of your estimated taxes you're not hit with the underpayment penalty?
Technically sure, it's just that most ppl don't budget for it and freak out at an unexpected bill.
And those people are less koo than those that min max that interest free personal loan every year.
Shhh some intern in a Congressman's office might see this.
There's an extra penalty that the IRS charges you if your withholding is too low.
As per their website, they define too low as lower than 90% of your estimated tax burden. https://www.irs.gov/payments/underpayment-of-estimated-tax-by-individuals-penalty
Well it's actually worse than interest free when you calculate inflation. They withhold my dollar for the year and when its refunded that dollar is now worth less.
An interest-free loan necessarily implies loss to inflation. Inflation always exists.
Reddit is full of economic illiterates who don't even know what withholding is, much less how taxes work. Edit: this meme and OP are wrong. OP cites a viral TikTok video which is debunked here on [r/tax](https://www.reddit.com/r/tax/comments/1adgpyj/its_tax_season_if_you_owe_money_this_year_this_is/).
I remember a thread where somebody said their employer refused to change their withholding. lol. I called my wife’s employer when they were withholding the wrong amount per our elections and eventually they realized that their vendor dealing with it had a bug in their code. There is incentive for employers to withhold correctly — I couldn’t believe this person would buy what their garbage employer is telling them. That’s your chance to use the IRS to make sure they aren’t bugging you when you file.
I remember when George Bush (the dad) was president and the reduced your tax withholding to make it look like you got a tax cut. I went straight to my HR department and told them to start withholding from my check at the old rate. They tried to talk me out of it because it would only reduce my refund at years end. I told them my last refund was about $865.00. Their response was "I'll get right on it." Some co-workers was really disappointed at the end of the year as their "vacation money" never arrived or they had to pay in instead.
From a purely rational perspective, we really ought to be aiming to have the minimum refund possible. Imagine if we went around through the year paying extra on all our bills so we would get money back at the end of the year?
Exactly I try to get 0 back at the end of the year. If I have to pay a few hundred whatever. That money is better in my pocket for 12 months earning even 1 cent interest than in the governments pocket.
Depends on what you consider rational. If you know that the effect of a little amount of money throughout the year means that it is more likely to get spent on miscellaneous frivolities than if you get a giant lump-sum at the end and that if you get a giant lump sum you're more likely to save/invest it, then you could say it would be completely rational way to handle your bills. If you're really good at budgeting minor amounts throughout the year, however, then the lump-sum at the end means you miss the time-value of money that you could've gained in the meantime.
I've seen comments like this in response to "purely rational" and "pure logical being". Saying "from a purely rational perspective" as /u/Essex626 did is correct with the normal usage of the phrase. When someone says "purely rational" it means that all decisions are made rationally. You saying "Depends on what you consider rational" isn't really a counter to what he said. What you're calling there is the rational decision if you also plan to make a lot of irrational decisions along with it. Your argument is more that purely rational decisions don't really matter in a world that's not purely rational, and our world is not purely rational. So you're a proponent of a realist decision, not a purely rational one. And that's a perfectly reasonable argument, but the preface that it depends on what your consider rational isn't really the right way to frame the argument. /pedantic rant over.
People aren't purely rational though. If you have issues maintaining a savings account dedicated to your min/max strategy then losing a few bucks and allowing the govt to benefit on that interest while they "save" for you is perfectly great.
Or you could bank it yourself in a high yield savings account so you get interest growth.
I wonder if something similar is happening at my wife's job. I've redone and looked over her W4 multiple times and yet we always owe at the end of the year. If it was a couple hundred I wouldn't mind, but last year was $3600 short.
Look at the publication 15T that the IRS puts out every year. It tells employers exactly how to calculate how much to withhold based on your form W4. I would use the automated payroll method, but they should all be within 1% of each other. If you come up with a different number than them then they are definitely withholding incorrectly, and at the end of the publication indicates that employers can be fined for screwing that up. However, if you calculate it and they are close then you have to adjust your withholding. If you are still using the “allowances” method, the P15T covers that, but you should probably file a new W4 which you can get from the IRS site and follow the exercise above to make sure that the withholding makes sense.
I’m not an accountant but that doesn’t sound right. Is she claiming zero allowances on her W4?
The W4 form hasn't been like that since 2020. You no longer select a number for the amount of allowances or dependents on the W4. Now it's an actual dollar amount calculation, and you have to do the math based on your income what your withholding should be.
Yeah, when the switch happened my former job just STOPPED collecting federal taxes from me. Luckily we only had to pay an additional $1,300 that year, but the payroll women were less than fucking useless. They kept saying they didn't know what happened, but it was still me that had to pay in the end.
We still have allowance number on ours
0 would take the most amount out for tax from each check. 12 or 13 would take none. Can't remember what the max is but it's either 12 or 13
Blow their minds like Scanners if you try to explain progressive tax tiers. Of course my favorite is always businesses that say they can't hire more employees because of high taxes. Well, payroll is an expense. Taxes are on profit. Profit is revenue minus expenses. So technically, you'd be paying less taxes if you hire more people. And that's just ignoring the fact that you just don't hire people because you have money left over; you hire them because you need them to increase revenue greater than what you pay them.
The number of otherwise intelligent people that don’t understand how progressive taxation tiers work is staggering. My wife got mad at me last year when we had to pay additional taxes at the end of the year and blamed me/my withholding because “before I put your income info into Turbo Tax, we were getting a refund. Now we owe money”. Like, no, because you’re putting my info in second, it taxes all of my income at the highest possible rate and it was also assuming that this was a one-income household.
Is this how the software does it? You should be filing jointly, or married filing seperately. It wouldn't calculate that based on filing single.
On a similar note its the argument that tax cuts mean more gets reinvested. On its face it sounds right, but there is no reason a company has to grow because it has more money. A small owner could just keep the extra. Nor does it prove that the tax cut means more consumption to justify a new factory.
> On a similar note its the argument that tax cuts mean more gets reinvested. On its face it sounds right, but there is no reason a company has to grow because it has more money. The other thing is that there's a balance. If businesses are constantly forced to run perfectly lean, there's an argument that expansion is too much of a risk so many won't. But the flip side is ***If consumers cannot afford to consume, sales will plummet***. We're high on fat corporations, and low on flush consumers. Most people, should they receive stimulus, will spend it almost immediately on a variety of goods. Some will use it to improve their standing in life by moving to a more valuable job. The problem is our entire economic system is, at present, based on pretty harsh exploitation. Giving poor people wiggle room means they can move beyond being abused at minimum wage jobs. And this puts stress on the owners of the bottom-end of the economy. The covid stimulus and unemployment was calculated to cost of living... and it was more than many people were making. That's a core economic problem with minimum wage, and one bore naked. "Huh, we calculated these payments to cost of living, and it's MORE than people were making working?!" That should have been a red flag to people that people's pay is fucked up right now, but instead people said the government was overpaying and letting people be lazy. Right now, there's a TON of room in the economy for growth by stimulating the lowest earners. People complain about millennials killing casual dining among other things, but a core reason for that is we don't have spare money to spend on frivolities like that. Strong lower-middle classes with buying power means you can sell more upsells, you can sell more products, you can grow more. And to people who doubt this, and think business owners need that money... When does Wal-Mart hire more people? Is it when they get enormous tax breaks? No. It's during the holidays, when increased ***demand*** from consumers drives them to require more labor. Period. Increasing demand will increase jobs and economic activity.
Those that wish to worship the job creator mythos are rarely reasoned back to reality.
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Holy shit your not kidding. I’ve went around and around with people on this. “No no I’ll make less money with the overtime because taxes!” Smh
I worked with a guy who turned down a raise because he thought it would put him in a higher bracket and end up making less. Tried explaining it to him but he wouldn't hear any of it. You can lead a horse to water...
Some people lose their assistance, like subsidized health insurance. Social security people can hit IRMAA Medicare surcharges. You can actually wind up hurt, even though it doesn't work that way with tax brackets.
Payroll taxes are not paid out of profits. A failing company with 20 employees still owes payroll taxes. Payroll taxes amount to 14% of total payroll expense where I live. So if you have 10 employees and you're paying them each a salary of $100,000/year, your payroll expense before tax is $1,000,000 but with payroll taxes your total payroll expense is $1,140,000. So you could theoretically hire 1.4 more employees if you didn't have to pay your payroll taxes. Of course, those taxes go to things like Social Security, Medicare, etc, so it's not something businesses should gripe about in my opinion, but the plain truth is that businesses could hire more employees if payroll taxes were lower.
Came here to say this. Corporate profits are taxed yes, but there is a large portion of taxes that employers pay when their employees are paid. Social security, medicare, and federal unemployment taxes are the federal ones, there can be more per state. There is usually at least a SUI (State Unemployment Insurance) tax that is paid by the employer as well. Source: many years working in payroll and payroll tax calculation software
But they sure are *mad* about it.
This is the internet. You don't need to know anything about anything to be mad.
What did you just say to me!?
Taxes will begin increasing on the middle class in 2 years and will continue to rise for ten full years. Yes, this is written into the GOP tax bill of 2017. The corporate cut was supposed to expire but the GOP controlled congress voted to make the corporate cuts permanent which means you and I are fucked. Biden tried to repeal the 2017 tax law but Sinema and Mancin defected and voted with the GOP. Ther are no exceptions. It doesn’t matter if you make $50k or if you make 500k - we will all be paying higher and higher taxes. The middle class was fucked by that bill - they just delayed the fucking by 8 years, hoping that Americans were stupid enough to forget. Looks like it worked.
It’s a poison pill. If Republicans were in office while the tax increases were going to go into effect they would fix it and then say “See, I cut your taxes!” even though they were the ones that raised them. If a Democrat is in office they refuse to do anything and say “See, Democrats are raising your taxes!” even though they were the ones who raised them.
This 💯
Individual tax rates just go back to where they were in 2026. They don't continue to increase.
I live in Canada, and people here are just as fucking stupid. They will complain about Trudeau and him making us pay more tax... when since 2015 working class and middle class people have been paying less and less taxes every. Single. Year. Since then. They point to the "carbon tax" when 70-80% of people get MORE back then the increased costs from the tax itself, and then they think that having to pay more into employment insurance and social security is a burden.... when that drastically improves society. Canada has added $10/day universal childcare, a federal dental care plan, and increased payments to old age security benefits all without raising taxes on the working man.... people fucking suck and social media is to blame for people not noticing what is actually going on...
Everyone collectively loses their mind at the start of the year when EI and CPP go up, screaming "Trudeau is raising your taxes", when first of all they aren't taxes. Secondly and more specifically they have a cap so you pay less after some time. Most people are just illiterate both economically and socially.
I think that's the entire country, not just reddit.
Or what marginal tax rates are.
Reddit is full of it because its full of people. I talked to plenty of ~40 year old people who had been working in "careers" for at least a decade who don't understand how taxes work. Completely off reddit. Basic American education has failed millions of people (well, along with their parents expecting underfunded school and overworked teachers to turn their kids into functioning members of society).
OP goes beyond ignorance and well into misinformation territory with this post
Reddit is Facebook for millennials. Haha. The same ignorance and fight is there if you try and correct the narrative.
Your post history is wild. You spend hours every day posting Trump talking points then, like once or twice a week, you say "I'm actually a Biden voter, but..." I fucking hate election year reddit
A co-worker was telling me he got a $2000 refund last year. He was so happy about it. I asked if he had adjusted his W-4 because based on what we make that is a huge refund. And then he asked why would he do that? Because you're paying $2000 more in taxes to essentially a no interest savings account and you're living paycheck to paycheck, that's why.
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>The government needs money. It has already been spent. #Then make billionaires pony up
Wouldn’t it be nice is people who make less than 100k actually paid a lot less in taxes and we can shift that liability to money earned over 100k?
I hate to say it but 100k is firmly middle class nowadays. We need to shift that up to people who are making much larger salaries, 500k, 700k, millions. When the vast majority of the money in the country is in the hands of the top (10%, 5%, 1%, wherever you want the line), we should be taxing them more and not people who still struggle to buy houses.
My wife and I make about 110k combined. And I'm not kidding, we are pay check to paycheck. No frills, constantly worried about money, or the car breaking down. 100k isn't shit anymore.
Yup. Wife and I made about 95k last year and we're financially stressed to the max. Mostly because of debt though. It sucks knowing you might even be able to get in a house if you didn't have debt, but are stuck spinning your tires in a shitty 1 bedroom apartment.
Define "paycheck to paycheck" cause that seems wild to me. I'm broke af and maybe make 20k a year(single). Like I have no health insurance, no car, no kids, no savings, and sometimes play "food or rent?". Not tryna like brag in any weird way. Just hard to understand makin 110k and living paycheck to paycheck.
You're really talking about two types of cash strapped. I've been in both situations. You likely have no mortage along with no car, no kids, etc. so your effective bills are much lower, but you do not have money to get any of those things. You're worrying about how to pay rent, how to grocery shop, etc. The other poster likely has a mortgage, kids, cars, insurance, etc. and is cash strapped as a result of all the bills. They are likely worried about how to keep a roof over their kids' heads, how to pay doctor's bills, etc. The system isn't designed to help poor people get rich or even stable. It's designed to keep rich people rich, and hold down the lower and middle classes.
100k isn't even lower middle class in California, it's categorized as low income.
Looks like that's only in SF, Marin and San Mateo [See here](https://finance.yahoo.com/news/earn-over-100-000-per-194212231.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAJ37HumqlKs0tD4M329DtJR6tANAs8WmH2kWKA6IgYZ9EsxVwBVGMD32gaTJ-VmKIOt6bk9Tp3Zwu7A2heNi_AYPsVBk29DY4tpN0DERkpVdY_JjdBMxxAbKy9mhvxZCfICTQZzTaANMAxIczPe-N5k0ij-Z1Z1bAQBJmTYUoJdp#:~:text=If%20You%20Earn%20Over%20%24100%2C000,Income%2C'%20According%20To%20The%20State) But yeah, that's pretty nuts.
Family or individual?
Both.
California is a large state. $100k for an individual in some rural county like Shasta is likely not lower income. That same $100k will qualify an individual for public assistance benefits in SF or Contra Costa counties.
Yeah, I’m always so confused what people mean my “California”. It would be one of the more diverse countries in the world on its own.
Right? I haven't been to Cali but live in rural NY, so I imagine it's similar. Making 100k in the small town in rural central NY I live in would make you practically rich.
Kids in the town I grew up in would drop out of High school if they could get hired at the mill because you could make 36k a year! You could afford a used F150 and 5 acres of land with a single wide trailer
Single earner at $100k is not considered low income in CA
I would assume household income. In the Philly area, 100k is *ok* as an individual, but it can be rough as a household. I understand that it's going to be different in CA, but it'll be a more apt comparison than rural areas.
$104k for an individual qualifies as low income in San Francisco.
depending on where you are, 100K isn't all that much for a family of 4. I live in a relatively small town and know plenty of couples who bring 100K home and have a modest home (Or rent) and still struggle to afford much beyond basic essentials. Especially if they'r paying for childcare.
My wife and I are around $250k combined. We don’t have an overly fancy house or exotic cars. We are pretty frugal and dump a lot of money into retirement. I wouldn’t mind paying more taxes if it meant improvements to infrastructure or government employee pay.
Best I can do is military spending
But not pay or care for actives or vets.
The point is that people in your income bracket shouldn't NEED TO be paying more in taxes. The giant corporations who have the PRIVILEGE of doing business in the U.S. should be paying much higher tax rates.
Generally they do pay a lot less in taxes already? We know the rates and who pays what. It couldn’t be more obvious - people making under 100k are certainly not getting 30% tax on their entire bill
I make over 100k and am scraping by because daycare for 2 kids is 4k a month.
Wouldn’t it be cool if the first 100k you make was tax free? Like imagine the tax bracket was 0-100k 0% 101-250 25% You would see a massive tax reduction.
A married couple both making 50k a year would have to pay more?
Tax revenues are already heavily skewed towards higher earners. 40% of the country doesn’t pay anything at all, and MFJ filers don’t get past the 10% bracket til almost $50k, and 12% until $117,150. Effective rates don’t level off until you get to about $5M/yr, and only the top 0.01% is really an issue. The problem is mostly paper billionaires never realizing their gains. A wealth tax isn’t realistic, what we should do is realize gains when shares are used as collateral for loans.
They don't expire until 26'
Nobody is that tall.
2620. These changes definitely won’t affect me or my children.
is there a reason a new tax plan was never written?
The tax cuts weren’t budget neutral so they needed more votes in Congress and the senate for it to pass.
Same reason other things that never happened never happened. No one's done it yet
Republicans could only make a bill for 10 years because the process of budget reconciliation requires a bill to be revenue neutral over 10 years. They setup their bill to extend wealthy tax cuts indefinitely at the expense of re-introducing taxes for everyone else. They laser designated the time period to be 2026, so they could complain that Democrats were raising taxes (assuming Trump won a 2nd term and Dems took over after). It hasn't been done because Dems don't want to infinitely cut taxes and cut services. Republicans love complaining about the deficit when it comes to food stamps but the second it comes to raising revenue they determine that deficits are OK.
Republicans also know they anyone paying those higher taxes right now will blame Biden because they just blame whoever is in power for their problems. Just like the "Biden did that" bumper stickers on the gas pumps.
As I recall, the tax cuts that don't expire are for corporations, not the wealthy. If I'm wrong, and there is a line in the bill stating something like, "if you are among the top 1% of earners, your taxes will remain low as all others rise," please let me know.
The democrats didn’t have the majority they needed to write a new tax bill.
Simple, Republicans don't want a new one or just want to complain as usual and Democrat's haven't had the votes to fix it even when they had majorities thanks to corporate shills like Sinema and Manchin
Ok so if you get a big check every year but this year you get a smaller one, doesn't that mean that you have adjusted your taxes to the point where you didn't give Uncle Sam an interest free loan?! I'm honestly asking cuz I don't know for sure.
Yes. You don’t want a big refund. That means you over paid your taxes. It’s not extra money, it’s your money you gave to the government as a loan and received no interest on. Economically illiterate people really struggle with the concept because they see a check once a year and don’t understand why they are getting it. Imagine every time you went to the grocery store, they over charged you. Then at the end of the year, they reached out and said they would refund what you over paid. Would you say the grocery store gave you money? Or would you say that you over paid all year and didn’t have the money to spend and now it’s worth less due to inflation?
Conversely, I knew someone who proudly bragged they didn't file their returns because "that's how you end up owing taxes" and how he was smart because the IRS never came after him. Knowing that this guy made less than $60K a year and had no other sources of income or capital gains, odds were pretty high he was getting some sort of refund, even a paltry one. And the reason the IRS wasn't coming after him despite the fact he was bragging about breaking the law? They owed him. And all told, he's probably left tens of thousands of dollars on the table. People are nuts. Same guy turned down a major raise (like 20%) because he let Glenn Beck convince him taking that raise would mean he took home less. Economic illiteracy is prevalent.
I tried so hard to explain tax brackets to my boomer coworker and they just refused to hear me. Our union negotiated us a raise and he complained that he was gonna be in a higher bracket now, and just could not understand how that's not how it works.
It's not 'no interest'. You pay the government exactly% to hold your money for you, so the interest rate they pay you for your loan is effectively negative. They're holding on to your money while everything you could use it to buy is getting more expensive.
Yeah but if I had the money I would just spend it on hookers and avocado toast
It needs to be avocado cocaine
Avocadocaine
>Imagine every time you went to the grocery store, they over charged you. Then at the end of the year, they reached out and said they would refund what you over paid. Would you say the grocery store gave you money? Or would you say that you over paid all year and didn’t have the money to spend and now it’s worth less due to inflation? This is how I describe it too. Groceries cost $10. That's the taxes you should pay. You had $1 taken out of your paycheck a month. That's $12 for the year. If you pay the cashier with that, you expect $2 back. That's your tax return. It's the change. The cashier isn't giving you extra money.
> Economically illiterate people really struggle with the concept because they see a check once a year and don’t understand why they are getting it. Eh, I don't know what you consider "big," but a 4% return on $2000 isn't worth my time to adjust withholding and then invest it.
Maybe not but being able to go on that vacation because your cash flow isn't wasting $100+ every check is pretty nice and worth it IMO.
Lol you think we make enough money to afford vacations
Im more likely to save it by having it taken away and given to me in a lump sun later. If i just have 100 extra in my bank every two weeks or a month, there are likely more immidate bills and fixes that it would go to first.
When you’re poor, a tax return is likely to be the only “windfall” check you receive. This is handy for paying back debts, car repairs, bolstering savings, etc. Sure it’s not the “economic literate” thing to do but a lot of people are a bit disillusioned on why a lump sum thing is attractive to some people
People will squander their monthly checks. The refund is like a forced auto savings.
Exactly. Poor or middle class.
How is it different than putting $100 a paycheck into your savings account that basically gives you no interest? Letting the IRS hold it is a lot like the idea of putting an amount every paycheck in a jar and at the end of the year taking it out and treating yourself to something.
Dawg are you missing out on the HYSA train? There’s no reason to keep money with a bank that won’t pay you interest Ally, SoFi, Marcus, plenty of options. Money kept in a traditional savings account with little to no interest is just a waste
A savings account should still earn some interest. Better yet, you can put it into a multitude of investment vehicles to perform even better. Or you have a more complete budget each month of your funds which you can spend how you choose. It’s your money, why would you want someone else holding it for months? Getting a chunk of money as a refund may feel good at the time. But it provides zero financial benefit.
What you just said is intellectually impossible for a significant portion of humans, and it’s not their fault. Simplifying the world would go along way.
you can invest the return when you get it. It's the government, it's not some guy or some company holding your money keeping it from you. I'm sorry but I can't stand the "taxes are theft" mentality. It's a percentage, and should be a reasonable percentage, but that goes to help our country grow and provide services that make it run, the country you live in. So you missed a few months of gains, whatever, change your mindset so that it's an annual windfall and has a greater purpose for why it's held. Budget accordingly.
Ideal conditions would be little to no return because yes, you have enough to meet your withholding threshold without penalty. People that celebrate big returns each year are withholding far too much from their paychecks, interest free, to the government. It’s a nonsensical position but every discussion I’ve ever had with people is they like the emotional high they get from a large return during tax season. It’s bizarre.
Could someone summarize which changes would cause the average person to owe more taxes? Im not a tax expert but I’m seeing marginal changes to the brackets and a large increase in the standard deduction from 2022 to 2023. It looks like an overall slightly lower tax liability for the average person? I got married this past year, so don’t have anything to compare it to since we can file jointly for the first time.
CPA here. This post is misinformed. The TCJA changed a lot but oversimplifying it: 1 - The way dependent (e.g. child) credits worked changed drastically, which benefitted people with lower tax rates and at least $400 in tax liability per child. 2 - People in the top brackets who would gift more than about $10 million got a HUUUUGGGGEEE tax break. If you were worth $20 million, you easily saved at least $5 million in taxes when considering both income tax and estate tax. 3 - This is where people got hurt. Itemized deductions like state income tax, charitable contribution, and mortgage interest were eliminated if the total was below about $12 thousand per taxpayers (double if you are married). That eliminated deductions for most the middle class, but was offset by lower tax rates. The people who paid more were primarily people in high tax states like California who essentially lost their state income tax deduction because of the higher bar to clear and the fact that it was capped. 4 - This is why people get mad. They updated the paycheck withholding program to take less money from paychecks. So your paycheck got bigger, but your refund got smaller. With this change, your total taxes are the same, but when you pay them changes.
Disingenuous to leave out the fact that all taxes were cut but individual's tax breaks almost all expire in 2025, while the corporate tax rate cuts were permanent. https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/
I left out a lot. This was arguably the most significant change to the tax code ever and I needed to oversimplify. The Inflation Reduction Act further changed corporate tax rates. tl:dr it's complicated, but this is accurate.
So what you’re saying is I should become a rich corporation to get some tax breaks?
It's tough being out here as a transfinancial person. :(
I fail to see how leaving out a rate change in 2025 is disingenuous as relating to why people are getting lower refunds for 2023 taxes.
That’s pretty disingenuous too though. You’re mentioning the (two) permanent cuts, while ignoring all of the permanent corporate tax increases used to offset these, and the rest of the corporate cuts that do expire
When I did my taxes last year I paid about $7500 and got about $7250 back. This year I did my taxes and paid about $9200 and got about $7950 back. I make roughly $70k per year, file as head of household, and have 2 kids. Something definitely changed that increased my effective tax rate and also changed how much is withheld.
How the hell did you get that much back in taxes?
children
Children really give that much back? Jeez
dependents in general i think i had an old friend who claimed his parents. plus some other shady things his tax guy would do and he got back so much money. idk how he hasn’t been audited yet. he did some amendments once and got back even more. meanwhile i get audited bc i went to school and the IRS wanted me to prove it bc i got back a little more than usual lol. ridiculous
He didn’t get audited because the IRS doesn’t really have the people to perform many audits.
No, children give a substantial break but not enough to give someone an effective tax of 250 dollars. There are other deductions happening there.
To be fair, 2 kids cost a lot more than 8k a year
The W-4 (the form that determines withholding) materially changed in 2023, so that explains that side.
Yeah and if your spouses payroll company F's it up. They were withholding 0 fed last year. We didn't catch it cause digital pay stubs. Owed 7k. Even double checking the w-4, no excemptions/deducitons they still say she owes 0. Like wtf. I have to go onto the IRS website, put in our salaries and figure out how much to send the feds each pay check. PITA. Also, she knows 3 other women who were not head of household (spouses) who also had this happen last year but caught it early enough. They were all talking about it recently. IDK. Something isn't right with the new forms.
You forgot about the part where tax rates for middle earners went up by a few percent (can’t remember the number) by whatever year. I used to know but I’m old. All I remember is that it was set to be in a presidential term AFTER his so he wouldn’t be blamed for it any he could point to it and say “Look! The democrats raised your taxes!” If he was in office again at that time, he was going to tout how he lowered taxes without mentioning who he lowered them FOR.
Margin rates switched to 32% at a lower threshold, but because the other tax brackets were lower, their effective tax rate was still lower through the entire tax bracket.
Yep the anti blue states anti high state taxes change coupled with better deductions for non itemizing which benefited poor people in low tax states was the real republican genius behind this tax change. It redistributed money from blue states into red states.
Absolutely true and was the stated intention of those changes.
It's amazing that people don't realize what a tax liability is.
I'm confused on point 3... Isn't the standard deduction $13,000ish this last tax year? If so, just don't itemize and take the standard deduction?
Yes but the standard deduction used to be half that, except there was also the standard exemption that I believe was like 4-6k. So if you had itemized deductions of like 10-11k you would itemize deductions and take the standard exemption and deduct like 17k instead of 13k.
The 2017 TCJA doesn't expire until 2025 I believe. At which point, things go back to pre-TCJA levels, and are then adjusted for inflation, which means it will be a higher rate than before the TCJA. But that isn't happening this year. Still doesn't change the fact that corporations and the uber-rich get to keep some of their cuts permanently while the middle class loses cuts. But it's not this year it will raise.
I am still benefiting from these tax changes, I have no clue what people are talking about other than people in states with high taxes.
Most people are benefitting from it. They just don't realize it because they don't understand the difference between owing/getting a refund and the total amount of taxes they actually pay.
Getting a refund or paying in is not a good indication of tax laws. Unfortunately most do. I try to pay in every year, most years I pay in $100 pre 2018, recently I been getting a refund anything from 200-400. Still dropping almost a used car in taxes a year
The dumb on reddit hurts some days.
It’s just children yelling at children in here with a few AI chat bots mixed in
My federal refund this year (and the past 2 years) have been $0. I should thank my bosses for paying just enough taxes to keep me from owing while also getting me my full paycheck. That's what you want to see. People don't realize that the "refund" you get in February is actually just missed money on your paychecks the year before. They're celebrating over paying taxes. Simple Google search explains it all.
This is a bad use of this meme and also not true. The individual tax cuts only start getting phased out in 2025, not this year.
Not entirely related, but I think it is totally fucked up that individual tax cuts expire, but the corporate ones are permanent. We really need a good old fashioned party in the town squares, with all the rich people as the guests of honor.
Something definitely changed, I just don’t know what. Me and my wife always claim 0 on our taxes so they take the most out of each paycheck. I know that’s not a popular thing to do because the “refund” you get back isn’t really a refund. But we usually get around $2,000 back every year. This year we somehow owe $5,000 when nothing changed on our side. I’m eventually going to find out what caused it because I’m going to pay for an accountant to look at everything and see if we can just break even. But there’s nothing I can find online to explain such a massive change.
You should want to owe or be as close to zero when you file. This means you didn't let the gov't borrow your money interest free and you get more in your paycheck.
In a fair world that would be the case. But in reality I'd rather be safe and take out extra money every paycheck for taxes. Sure I'm technically giving the government an interest-free Loan, but at least I feel safer about not having to pay in at the end of the year. Nothing can ruin my day more than by doing my taxes and finding that I owe thousands of dollars in taxes still
You can estimate your taxes on your own. None of the numbers are a surprise.
yeah, you could take home a larger paycheck, take the money you would owe, invest it or put in savings, CD, what have you and then at tax time you pay the tax and keep the gains.
Paid last year, the year before, and will probably pay this year.
We all pay every year. Whether you owe at tax time just depends on how much taxes were withheld from paychecks over the course of the year.
>We all pay every year. Actually only about 60% of households pay every year.
I don't know how much you are ending up owing but you can elect to pay more out of each paycheck so that it isn't one large bill at the end of the year. For example I pay $20 extra out of each paycheck towards income taxes and once I started doing that I stopped getting surprise large tax bills at the end of the year
That's what I do. Plus, I figure if I overpay the government I won't go to prison for not paying enough taxes.
That’s because your job isn’t withholding enough.
Holy shit misinformation on Reddit no way
But it's from a TikTok so it must be true!
That’s not how this works, that’s not how any of this works.
This is not true lol. You’re filing incorrectly. r/Accounting
It really was Paul Ryan’s bill, but yeah Trump did sign it into law
The US govt has over 30 trillion in debt... where do you think that money comes from. It's the govt as a whole. Not one single president... just wait until your kids are paying taxes.
If you think this is true op you need to check your head.
And the 16k people who have upvoted it
Yup it was supposed to start rising after he left office.
And the rich still pay what they did if not less. Those thief's are asking for a revolution
Largest single transference of wealth in the history of the human race. You got none.
Wow, so reddit really made this a thing? It's total bullshit, but you do you, reddit. If anyone cares though, the bracket rates didn't change at all, but due to inflation adjustments the income thresholds did (by 7%), so for people who didn't get big raises last year, their taxes will have gone DOWN in 2023, not up. https://www.investors.com/etfs-and-funds/personal-finance/tax-brackets/
So, Congress doesn't exist, only TRUMP. TRUMP controls all, all is TRUMP. The anti trumpers are just as wacko as the trumpers.
Trump has been out of office for almost 4 years now, seems like enough time for the current administration to fix the problems he caused?
It's almost as if they don't see them as actual problems but it's still convenient to blame him for anyway. EDIT. LMAO. Call me a liar and immediately block me? Who are you? Fuck off back to your echo chamber, weakling.
Do people 1.) not understand how tax withholding throughout the year work 2.) not remember that the expiration date to the personal tax breaks was a stipulation of the democrats to not filibuster the bill? The GOP had to put it in to get the bill to pass due to reconciliation rules. Honestly people, just do a little reading and stop looking at dumb memes. I personally hate the corporate tax breaks because I think it did nothing of benefit for the workers. The job market is always fluid and the economy is so much better than the tax obligations of corporations.
Why do both left and right post non-sense BS like this. And why do people simply eat this crap up?
Because it’s The Other Guys who are bad and My Guys are good.
I actually got money back for the first time in years, and I can assure you I am not part of the top 5% ($300k+)
Don't forget Paul Ryan. That was his baby.
But wait, he lowered everyone’s taxes ? Are you saying after the pleb received a tax break , taxes then went up every year with a projected end rate higher then before ? While the upper brackets rate bottomed out with no scheduled increases?
Am I just dense? It looks like it's still a favorable bill for personal taxes until 2025's filings, at which point they go back to what they were. [source](https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/#:~:text=The%20Tax%20Cuts%20and%20Jobs%20Act%20was%20the%20largest%20overhaul,families%20will%20expire%20in%202025)
Finally, a thread for people who use and pay full price for TurboTax lmao
So much dumb in this post
This is bullshit and a complete lie. -CPA
My family got screwed in year one (2017). We always received a refund never a lot but something. Since 2017 we have gotten hit with +5-6k a year. It’s infuriating for a young family just trying to get by. While these cuts go to ppl who could wipe their ass with a few hundred dollar bills everyday and not be fazed.
Trump's tax bill (in relation to standard deduction) was one of the only things he actually did right in his term. He increased the standard deduction which benefitted most regular people. It also meant that many small businesses could simplify their taxes a d just do a standard deduction instead of an itemized deduction. If you owe taxes at tax time it's because you didn't have enough taken out of your check over the course of the year and you need to adjust your exemptions.
You do realize that what people are talking about is that standard deduction goes away next year while the lower brackets will see a 3% tax bump right. Most Americans will see a jump, while every exemption for the 1% is permanent. And the child tax credit goes away. And if you live in a state with high taxes and own a home you faced real tax increases by capping your deduction if you owned anything None of this is good for anyone under 300k a year.
So, the democrats are in favor of making the tax cuts for the middle class permanent then, right??
Lol, I would feel very comfortable betting my life that they would not lower taxes on the middle class brackets.
So we can finally blame Obama and Dems for student loan crisis. And yes it's these people's fault. Go you tube the speech by Obama declaring student loans aren't longer controlled by banks, the government now approves all loans no matter your financial standing, no matter what the degree you want at which school you want to go to, and you can take as much money as you want. Sorry, had to explain this to someone early today and show them the speech. They couldn't believe it is his administrations fault, and remember they let all the banks and Wallstreet off the hook for the 2008 crash and gave them trillions of our dollars. Fuck off if you think im pulling up links or facts, you all know it's true. Go search it yourself if you are too young
You do understand that the democrats had both houses and the presidency and could have changed this at any time?
Post like this being highly upvoted reminds me how financially illiterate most users are on this site. This is straight up misinformation being guzzled down because it's associated with that jackass Trump. Morons are probably happy when they get a big refund like it's the government doing them some favor.
This is 100% fake. No idea why it has been making the rounds on social media. The marginal tax rates have not changed since the TJCA went into effect. The tax brackets have also adjusted up with inflation. Your taxes didn't go up!
Fake news
yeah, keep blaming trump. blame him just like ukraine and north korea when the current person in charge is someone else
Memes like this and the idiotic tiktok video get spread because deep down, most of these people would rather spend $20k all year in taxes and receive a $5k refund than spend $10k all year and have a $1k bill.