{"id":1125398,"date":"2019-07-08T19:03:12","date_gmt":"2019-07-08T19:03:12","guid":{"rendered":"https:\/\/dailyreckoning.com\/?p=107626"},"modified":"2019-07-08T19:03:12","modified_gmt":"2019-07-08T19:03:12","slug":"the-cult-of-the-trump-tax-refund","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1125398","title":{"rendered":"The Cult of the Trump Tax Refund"},"content":{"rendered":"

This post The Cult of the Trump Tax Refund<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

Last week, I told you how I got a surprise correction from the IRS \u2013 one relating to Trump\u2019s new tax laws and my Solo 401(k) retirement plan.<\/span><\/p>\n

What I didn\u2019t mention is the monetary impact of that note \u2013 essentially, I ended up owing a couple thousand more in taxes than I had previously figured.<\/span><\/p>\n

Before you shed a tear, on balance, the new tax laws were a net positive for my specific situation last year.<\/span><\/p>\n

Even though my Solo 401(k) contributions were slightly less valuable, the qualified business income deduction was a big win …<\/span><\/p>\n

While the SALT cap is painful for someone like me living in California \u2013 with high state income taxes and high property taxes \u2013 at least my oversized mortgage is still fully deductible because I purchased my home before the new lower limits kicked in …<\/span><\/p>\n

And with a young child in the home, the doubling of the child tax credit (plus higher phaseout thresholds), was an additional positive.<\/span><\/p>\n

I could keep going.<\/span><\/p>\n

The point is that many things changed and how the sum total affected you depends on the very specific details of your life.<\/span><\/p>\n

How did Americans Fare Under Trump’s Tax Changes?<\/b><\/span><\/h2>\n

The\u00a0IRS just released its first batch of official numbers, using tax returns filed by May 23<\/strong><\/span>rd<\/sup><\/span><\/strong><\/a>.<\/span><\/p>\n

Roughly 10% of filers are still using the benefit of extensions and haven\u2019t turned in their returns yet. Moreover, that group of people tend to be higher-income filers \u2013 with more complicated returns \u2013 and they represent 20% of all the income reported to the IRS.<\/span><\/p>\n

Still, we can get a good idea of where things stand.<\/span><\/p>\n

Here are some general takeaways:<\/span><\/p>\n

#1. Households making somewhere between $100,000 and $250,000 received fewer refunds and were more likely to owe money.<\/b><\/span><\/h3>\n

That comes from a Wall Street Journal analysis of the IRS\u2019 data<\/strong><\/span><\/a>.<\/strong> But we\u2019ll talk more about this idea in just a second. It isn\u2019t really what it seems.<\/span><\/p>\n

#2. Average refunds for households making $250,000 to $500,000 rose 11%.<\/b><\/span><\/h3>\n

I suspect this has a lot to do with the aforementioned QBI and other benefits for businesses and their owners.<\/span><\/p>\n

If you\u2019re starting to feel like only the wealthy made out \u2026<\/span><\/p>\n

#3. From a high-level view, about the same number of Americans got refunds this year (79% vs. 80%) and for roughly the same amount ($2,879 vs $2,908) as the 2017 tax year.<\/b><\/span><\/h3>\n

So if you\u2019re now feeling like the ultra-wealthy made out and everyone else got shafted, you\u2019re not alone.<\/span><\/p>\n

Barron\u2019s <\/i>recently cited a Gallup poll conducted in April, which found only 14% of Americans thinking their taxes went down.<\/span><\/p>\n

However, the reality is far different \u2026<\/span><\/p>\n

#4. The Tax Policy Center says roughly two-thirds of American households paid less in taxes overall year-over-year while 6% paid more.<\/b><\/span><\/h3>\n

How is this possible?<\/span><\/p>\n

How can half of the population not realize their taxes actually went down under the new laws?<\/span><\/p>\n

Beyond the fact that many people outsource their tax preparation and thus have no real connection to what\u2019s happening in that part of their life, many Americans only look at their refunds.<\/span><\/p>\n

If they get money back after they file, they\u2019re happy.<\/span><\/p>\n

If they get more than last year, they\u2019re really happy.<\/span><\/p>\n

Of course, none of that makes rational sense.<\/span><\/p>\n

This year, for example, IRS withholding amounts were adjusted earlier in the year.<\/span><\/p>\n

That means many workers had less money getting taken out of their regular paychecks. So what they ended up owing or getting back is not a good indication of how they fared overall.<\/span><\/p>\n

So What\u2019s with the Overreaction?<\/b><\/span><\/h2>\n

The entire \u201ccult of the tax refund\u201d is completely misguided and always has been.<\/span><\/p>\n

Getting a large refund from Uncle Sam simply means you loaned him a good chunk of money at zero-percent interest over the course of the year.<\/span><\/p>\n

That\u2019s hardly something to celebrate!<\/span><\/p>\n

Instead, your goal should be paying exactly what you owe and not a penny more.<\/span><\/p>\n

Or, even better, paying less than you owe without incurring underpayment penalties and then writing a check for the difference come filing time.<\/span><\/p>\n

And bonus points if you have the difference invested and earning some type of return during the interim … which is the polar opposite of what almost everyone else does.<\/span><\/p>\n

To a richer life,<\/p>\n

\"Nilus<\/p>\n

\u2014 Nilus Mattive
\nEditor, The Rich Life Roadmap<\/i><\/p>\n

The post The Cult of the Trump Tax Refund<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

This post The Cult of the Trump Tax Refund<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

How Trump’s new tax laws have affected Americans across the board.<\/p>\n

The post The Cult of the Trump Tax Refund<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n","protected":false},"author":55,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[2977,366,2822,1643,2229,771,923,467],"tags":[90],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1125398"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/55"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1125398"}],"version-history":[{"count":1,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1125398\/revisions"}],"predecessor-version":[{"id":1125399,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1125398\/revisions\/1125399"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1125398"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1125398"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1125398"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}