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Re: What's the story on tax returns this year?

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Message 11 of 15

 tracey wrote-I keep hearing that refunds are smaller, and that people who never owed before this year, owe, but none of the people talking are retired.--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------I`m retired and I had less money withheld during the course of the year and I also got a bigger refund than in 2017. New report out this morning says that refunds are higher than last year by 1.3 %. It seems that initial reporting on this was wrong. Keep in mind that many companies made adjustments in withholding taxes resulting that more people kept more of their money each pay period. This is a good thing -why let the government keep your money for up to a year and not paying you any interests just so you can get a refund?

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Re: What's the story on tax returns this year?

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Message 12 of 15

@CarolH325608 wrote:

What is the status of the House Bill to raise the Social Security taxable benefits threshold for single people from $25,000 to $75,000 plus adding a cost-of-living adjustment? In 1983, when the Reagan administration passed legislation to start taxing Social Security benefits, they did not add a cost-of-living adjustment; therefore, the current stagnant $25,000 taxable benefit threshold should realistically now be $75,000. I understand that a House Bill previously failed in that the Far Left attached all sorts of free stuff for people who did not pay into the system. There was supposed to have been a revised House Bill put together afterwards removing this free stuff for people who did not earn benefits like those of us who paid into the system for all of our working life.

 

 


The John Larson - D/ Conn - (Social Security 2100 Act) is in Committee now -

It raises the income limits on taxes on SS benefits -

Section 104. Replace the current-law thresholds for federal income taxation of OASDI benefits with a single set of thresholds at $50,000 for single filers and $100,000 for joint filersfor taxation of up to 85 percent of OASDI benefits, effective for tax year 2020.

 

But these thresholds would be fixed and not indexed to price inflation or average wage increase.  Since these taxes go into the SS / Medicare Trust Funds, it is done this way for maximum benefit (and needed income) for the SS/Medicare Trust Funds.

 

It is H.R. 860 (House) and S. 269 (Senate)

Senate:  Gov Track   S.269

House:  Gov Track   H.R. 860

 

Personally, I am a Conservative and this is good legislation.  It covers a lot but will make the SS system solvent for MORE than the forecast period of 75 years.

Here is the Social Security Actuary Report on all of its provisions and forecasted outcome.

https://www.ssa.gov/OACT/solvency/LarsonBlumenthalVanHollen_20190130.pdf

* * * * It's Always Something . . . Roseanne Roseannadanna
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Re: What's the story on tax returns this year?

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Message 13 of 15

What is the status of the House Bill to raise the Social Security taxable benefits threshold for single people from $25,000 to $75,000 plus adding a cost-of-living adjustment? In 1983, when the Reagan administration passed legislation to start taxing Social Security benefits, they did not add a cost-of-living adjustment; therefore, the current stagnant $25,000 taxable benefit threshold should realistically now be $75,000. I understand that a House Bill previously failed in that the Far Left attached all sorts of free stuff for people who did not pay into the system. There was supposed to have been a revised House Bill put together afterwards removing this free stuff for people who did not earn benefits like those of us who paid into the system for all of our working life.

 

 

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Re: What's the story on tax returns this year?

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Message 14 of 15

Sorry for the length, but please bear with me. This is simple. And it may give some insight into what all the hullaballoo is all about. (disclaimer: I am not a tax expert except as an informed payer of taxes)

 

There are two separate issues to consider (and I'm sure you're aware of these, but just to clarify so that all readers are on the same page...believe it or not, some people don't understand these points):

 

(1) what your Federal income tax bill actually is. For example, line 15 on form 1040 (and equivalent on 1040A and 1040EZ, etc). Regardless of how it's paid, this is your tax due. This may have been pre-paid in full (or more) or in part through payroll income tax withholding, quarterly estimated payments, etc.

 

(2) then there's your tax "refund". Many people pay more in withholding on their jobs, etc, than what they will actually owe in income tax. This may be by intent or not. Some people like the forced savings of large withholding, others strive to have their withholding pretty well match their tax liability. Many people get their tax refund and get excited! They will go spend it on a trip or whatever.


Now what has happened with the 2018 income taxes is this:

 

(1) in most, but not all, cases people may have a lower tax liability. There are some losers on this though. Many itemized deductions have been capped or eliminated, and standard deduction has been increased. Personal exemptions no longer exist. If someone in the past had itemized a large amount for deductible mortgage interest, property taxes, and other taxes, etc, well, now they may not be able to itemize and they'll be taking the (now larger) standard deduction, with the result that their taxable income is now higher.

 

Conclusion for (1): most people will pay less tax but some people will end up paying more.

 

(2) The IRS tinkered with the withholding tables (for payroll deductions, not applicable to retirees) and in some cases workers may not have sufficient withholding to cover their taxes and they may owe additional money instead of getting a refund. Even if sufficient tax was withheld then due to the lower tax liability they may end up getting a smaller refund than they have in the past.

 

The IRS and numerous publications hammered on this all year long (2018) that workers should check their withholding to ensure that it was sufficient. No one should be blaming the government or IRS if they hadn't done this.

 

Retirees who made their quarterly estimated tax payments are *probably* okay (just guessing).

 

Conclusion for (2): so, the likelihood of you getting a refund, or owing additional cash, will depend on how good you "guessed" at your 2018 tax liability with your payments throughout the year.


I'm going to hazard a guess that a new retiree (for the full year) and who made proper quarterly estim tax payments will likely get a small refund or have a small payment due. It won't be the sort of catastrophe you've heard about.

 

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What's the story on tax returns this year?

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Message 15 of 15

I'm due to have my taxes done next week by an AARP volunteer, (what a blessing these people are), and I'm curious if I'm in for some horrific tax due. I keep hearing that refunds are smaller, and that people who never owed before this year, owe, but none of the people talking are retired.

 

So, what say you retired people? This will be my first experience as a fully retired person for one year, and I'm hoping it won't be a terrible experience.

Thanks in advance for any info!

Tracy

Sir Granny Tracy
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