Hi, 

So this is going to be a follow up to my original post on tax reforms for 2019.  As I work as a tax preparer on the side, I have been hearing a lot of people say "my friends have to pay the government this year" or "there are a lot of upset people that aren't getting their normal tax refunds, they're getting a lot less".  I am not going to side with anyone on this, but I wanted to take the opportunity to enlighten the community on why there may be changes or why people have to pay, etc.

  • People have to pay:
    • The reason this MAY be the situation is because they can no longer itemize their deductions.  I am not saying this is not allowed, but considering the standard deductions almost doubled this year, if your itemized deductions (medical bills, mortgage, child care expenses, etc) does not add up to more than the standard deduction there is no benefit for the taxpayer to take the itemized deduction.  Typically tax prep websites or companies will tell you that the best way to go is the way that saves you more money.  (it's like a default on the websites, but they still let you choose how you want to proceed)
  • People are not getting as much as they did last year:
    • Last February, the federal government enacted the tax reform and cut the amount of taxes they take from each employees paycheck.  This ranged from about $30-$60 a paycheck.  In addition, the IRS urged employers to speak with employees about double checking their withholding.  This is the W-4 piece of paper that is filled out when you start a job.  Now the confusion is that if you have a spouse and 2 kids you automatically have to take 4 withholding.  The withholding you take on the W-4 have nothing to do with your family size.  So the employees that did not update their W-4's still had very little coming out of their paychecks including the tax cut amounts resulting in having to owe the government.
    • Also if you calculate $30 a paycheck and you get paid bi-weekly, that is $780 a year you got back already.  If you got back about $60 a paycheck and calculate that for 26 bi-weekly checks it equals $1560.  So if the tax return is $500 less than last year, the consideration of having the extra money every paycheck isn't made and tax payers are complaining.

I hope this clears a few things up.  I will be one to say I was not too happy with the tax reform as they removed all non-reimbursed business expenses for NON Self-Employed workers.  This took away from me.  Knowing this though, and heeding the suggestion of the IRS, I adjusted my W-4 to calculate it to get what I needed each paycheck and not have to owe at the end of the year.

I also know that every person out there is different and some like to get a nice hefty check come tax time and others like to have the extra money in each paycheck.  Each person's situation is different and it is a personal option on how they want it. I just educate the options everyone has and the tax payers do what fits their life.

-Lisa

- Lisa

Original Post

I have been dreading doing my taxes this year...

I started doing them on Tax Act and when I filled out the main info for my wages, it calculated a decent return for me.

But I chose "married filing jointly" since I got married in July of 2018.

When I added my wife's income, my return dropped to $600 owed in taxes.

I didn't have health insurance last year and my wife only had it part of the year.

Is this the reason it changed to taxes owed? Would you know why it would drop like that?

Would it benefit us to file as "married filing separately"?

@Lisa Eichinger

@Moore Income. It is usually most beneficial to file jointly. There are more credits offered. I can't tell you exactly why the amount changed so much without looking at the W-2's. My thought would be that her withholding for taxes was higher so they took less money out. 

Also the lack of health insurance for the entire year comes with a fee still. This is the last year people will be punished for not having insurance.

Does any of this help?

 

@Lisa Eichinger yes thanks. I am also running into some confusion with filing the state side when trying married filing jointly. She lived and worked in both Illinois and North Dakota in 2018, I only lived and worked in ND.

When I am filling it out it is asking me questions about my residency in Illinois although I technically never had residence there.

How much do you charge for your services? I am getting so frustrated trying to do my taxes this year.

@Moore Income. There should be a place on the state form where it asks if you or your spouse lived in the state all year. For her you would say no then it would be a part time resident for state taxes for her. You might have to do it married filed separately, but your federal taxes back that up with the state codes on the W-2'S. I'm reasonable with my charges to do taxes. I don't have a set charge.

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