Are you expecting a tax refund for 2018? You’d better check. An Englewood Indivisible member, encouraged by a friend who works at the IRS, checked to see if she and her husband would get their usual tax refund. She was shocked to find that, under the Trump-GOP tax cut legislation, they will owe money instead.
Our member’s full story is below, immediately following the simple instructions she’s written for you to check on your 2018 tax refund.
NOTE: You will be completely anonymous. No personal information is entered anywhere.
You will need:
As you are only using the calculator to estimate tax liability or refund amount, if necessary you can use values from your 2017 return if they haven’t changed much in 2018.
Go to the IRS Withholding Calculator.
There are 5 pages to go through. Some just have a few lines, and many have items that you will leave blank. It should take you less than 10 minutes to complete. The last page will show you your refund -- if you’re getting one. Here's a guide to each page.
PAGE 1: Filing status, # of jobs, #of dependents, over 65
PAGE 2: Child and Dependent Care Credit, Earned Income Tax Credit, Other Credits
PAGE 3: Wage Income and Withholding, Gross wages, salary tips (total yearly salary), Federal income tax withheld to date (on your paystub), Federal income tax withheld from last salary payment (on paystub), How frequently you are paid (choose from list), 2018 Nonwage income (e.g. social security, dividends and interest)
PAGE 4: Deductions – Standard is the Default method. You can also choose itemized. It is very easy to go back and forth between methods to see what works best for you.
If you use itemized, enter the following if applicable: Medical and Dental; Taxes Paid; Interest Paid; Gifts to Charity; Casualty losses; Other
PAGE 5: This is what you’ve been waiting for with bated breath! You will be given a summary that includes refund amount or taxes that you'll owe, as well as federal tax withholding recommendations.
GOOD LUCK and please let us know how you did, using this anonymous form!
When the new tax law took effect, I asked my childhood friend Midge (alias to protect the innocent), who has worked at the IRS for many years, what the changes would mean to the average American family. She told me that, as no one really knew what was going and no new training had begun, she was unable to answer my question. We had many conversations over the next few months but there was still no news regarding the changes.
A few weeks ago, when Midge called to wish me a happy birthday, she told me that she could finally answer the question I had posed many months before. Unbeknownst to me (and probably most Americans), when you work for the IRS you are never allowed to owe them money. Therefore, all employees must be certain that during the year they withhold enough federal income tax from their paychecks to cover their tax liability.
Midge said that everyone in her office was informed that they should use the IRS website withholding calculator to ensure they were withholding enough Federal tax from their paychecks. What with the new “tax cuts” and all, no one wanted any surprises come April.
Midge always takes the standard deduction and she told me that every year for the past 10 years or so, she has gotten a refund of approximately $1600. The good news? She won’t owe any money to the government and will keep her job. The bad news? Her refund will only be about $600 next April. Maybe this new tax law should be called “Refund Cuts.”
Well I did use the calculator and it was very simple and quite an eye-opener. The bad news? Come next April, if my husband and I take the standard deduction we will owe over $7500 to the Federal Government. If we itemize deductions and open a Charitable Trust for $10k, then we will only owe approximately $6200. Why? Virtually all of our past allowable deductions have been eliminated. The increased standard deduction (i.e. the one that expires in 8 years) doesn’t come close to making up the difference.
So, for my husband and me, the “tax cut” means that if this law doesn’t change, every month we will have to give more than 1/3 of my Social Security check back to the IRS.
Of course when I realized this I was very upset and screaming all over the house. My husband told me to calm down, that we just won’t get that new car we were planning to buy in October. After all we only have 105,000 miles on our 10-year-old car.
Although there is no good news, Midge told me that we won’t be penalized for not paying estimated taxes because we received a small refund last year and could not possibly have known how we would be affected by the “tax cuts.” Well then, Happy Birthday to me.