Just like dentist’s offices, they try and make the environment as cozy and comfortable as possible. There’s the coffee machine where a warm pot sits for anyone ready to enjoy a cup. In some places they offer bottled water and light snacks---cookies, crackers, assorted sweets---or a friendly receptionist will let you know where---just a short walk away---you can get a snack, even a meal. They’ll call you when a tax preparer is ready to see you.
But also like a trip to the dentist, there’s always a little anxiety when you’ve gathered all your documents---or at least most of them---and march into the nearest H&R Block, Jackson Hewitt or ‘Joe the Tax Guy’s’ office hoping for good news or, at least, news that’s not entirely bad; something you can handle.
For a lot of everyday folks, past is not prologue. The Republican tax plan that Congress passed in 2017 resulted in a lot of changes. Many of those changes include standard deductions, personal exemptions, child tax credits and a few more.
Married couples filing a joint return will get a higher deduction. Last year it was $13,000. This year it has nearly doubled to $24,000. Single filers along with married individuals filing separate returns get an automatic deduction of $12,000 up from $6,500 a year ago. Heads of households’ deductions rise from $9,500 in 2018 to $18,000 this year. But twelve months is a long time and what taxpayers experienced a year ago may be significantly different this time around.
Things have changed dramatically for Broomfield resident, Carla, a single parent who asked that her last name not be used. With her daughter now away at college, she had some idea that filing her 2019 taxes would be different.
“I had heard that people either weren’t going to get refunds or refunds were going to be less than in past years,” she said. “I adjusted my withholding (taxes) to have additional taxes withheld from my paycheck so that I would continue to get a refund.”
The biggest difference a year made for the Broomfield resident was adjusting both physically and financially to being an ‘empty-nester,’ the only person in the home. Her daughter is attending college on the East Coast. “I had been receiving a credit for a child under 18 and living with me for the past 18 years,” she said. While she no longer could claim a credit for her daughter, “this year I received a credit for her college expenses.”
She said she was surprised and pleased about this new deduction. Adjusting to her new reality has not been entirely pleasant. But planning for this annual rite of spring---taxes---has taught her a galvanizing lesson. “I will continue to have extra tax withheld each pay period and not make any changes from last year.”
The new tax overhaul is the first major change of the structure in decades. It also helped the President keep one of his biggest campaign promises. Republicans who moved the legislation through Congress hold that the package had something good for everyone.
But, hold on, say critics of this new era on tax policy. “The tax changes resulted in long term revenue loss for the government,” said tax attorney and Denver resident Ray McCall. “Many taxpayers, especially in higher tax states were hit with substantially higher taxes due to the loss of the deduction for state and local taxes. This hit those owning a second home especially hard.”
The veteran tax attorney---along with other critics of the new structure---points out that in the end, it may be a political win but one with a significant cost. “The combination of lower rates and increased government spending may add an additional $2 trillion to the deficit,” said. “The supply side argument that lower tax rates would result in higher revenue can now be laid to rest.”
The new Trump tax plan will also affect estate and mortgage taxes as well as contribution limits for retirement savings and IRAs. It would behoove filers who still have not prepared 2018 taxes to budget some time for a little homework to avoid any last-minute shock.
But there is this final word from the IRS that has both good and bad news for filers. The good news? During the first two months of 2019, it had processed more than 13 million tax returns with an average return of $1,865. The bad or not so good news? This year’s refund averaged about eight percent less than a year ago.
Oops! One more bit of bad news. Today’s La Voz Colorado is dated April 3, 2019. You have twelve more days to file your income tax---both state and federal.