I have a foolproof way of figuring out if someone has done their income tax calculations.
If they walk around with a smile believing that tax cut bill and those who supported it are on the side of the middle class, then they have not done their taxes yet.
If they walk around with a dazed, angry, frustrated, my-God-what-have-I-done-to-deserve-this look, then they have done their taxes and have realized that they are getting a far lower refund than they expected or will owe money to the IRS come April 15.
Only the conservative crew in DC could mess up a tax cut this badly.
Yes, you probably paid less income tax last year on a paycheck-to-paycheck basis, and I’m sure the money came in handy. What most people didn’t do, though, was to adjust their W-4 to reflect the cut and perhaps to have more money taken out of their check.
Then came the absolute worst parts of the whole bill: Those of us who live in states where property and income taxes tend to be high are capped regarding the amount of money we can deduct on our returns at $10,000. Please raise your hand if you live in New Jersey and pay more than $10,000 in property taxes. Keep your hand up if you took out a home equity loan or line of credit and used the money exclusively to pay down debt such as credit card bills.
I thought so. Your arm must be tired. You can lower it now.
The result is that you can’t take as many deductions, so you’ll probably have to take the new, higher-but-not-as-high-as-it-would-be-if-I-could-deduct-what-I-deducted-lat-year Standard Deduction, which is $24,000.
And…
The new tax law eliminates the $4,050 exemption you could take for each of your dependents. For a family of four, that’s $16,200. That means that you will be paying taxes on $16,200 more in income without being able to deduct as much tax and interest as you had been.
That’s why it feels like Guiliani time when you sit down.
But don’t feel bad. Corporations got a whopping 15% tax cut and probably used that money to raise your pay buy back millions or billions in company stock, which enriched the pay of top executives and enabled it to pay higher dividends to stock holders. Which might help you a little, but not as much as before the tax cut.
There’s a reason why the GOP didn’t run on the bill last November, deciding that it would be wiser to paint ragged, scared, hungry women and children as terrorists and invaders ready to cross the border and wreak havoc on our country.
They knew how bad it would be. And for once, they were right.
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