The rush to complete annual income tax forms is now over for most Americans, unless they have filed for an extension.
The April 15 deadline has come and gone and taxpayers have seen the individual impact of the tax law changes instituted in 2018.
Gone were the personal exemptions for family members. The standard deduction was raised to $12,000 for singles, $18,000 for heads of households, and $24,000 for married couples, so fewer people itemized deductions. The child tax credit went to $2,000, and a $500 child tax credit was added for older children. The combination of changes had varying effects on individual payers.
The beginning of 2018 also saw a reduction in withholdings, whether Americans noticed or not. Less money was withheld from most taxpayers throughout the year. Typically, taxpayers experienced fewer total taxes withheld, even if their income was the same, which caught many by surprise.
After about 40 years of the same basic format of a two-page Form 1040, with a signature on the bottom of page 2, the 1040 had a new look this year, with fewer lines for entries, and only half-pages to complete. We’ll also have to see statistics on how many folks decided to get tax help because of the changes in the “look.”
Calculating taxes this year for most was a bit of a trip into uncharted waters. Many were either pleasantly surprised, or perhaps in a state of shock as the numbers fell into place. Many have had to rethink their tax withholdings, or pursue other strategies to better prepare for future years.
Complete statistics won’t be available for some time, but a March 22 Credit Sesame story survey written March 15 showed the average federal tax refund at $3,068, compared to the 2018 average of $3,046. This number was preliminary in nature. Historically, those who calculate their taxes and determine they are due a refund file their tax returns earlier than those who pay in taxes.
The same article referred to a slight increase in the overall individual tax burden per individual. It is likely 2018’s strong economic growth and higher wages were the primary drivers, but the analysis is not yet complete.
How were you impacted by the tax changes? Most tax professionals have yet to complete the end of their hibernation of huddling around tax forms, so much of the anecdotal evidence has yet to emerge. Whether you were an advocate for a change in the tax laws or an opponent, we now have at least one year of experience in evaluating the effectiveness of the changes, and the impact on ordinary Americans.
There is one American whose tax returns have been sought vigorously for solely political purposes — those of President Donald Trump. An April 3 Time magazine story detailed a request by House Ways and Means Committee chair Rep. Richard Neal to the commissioner of the IRS, asking for the president’s tax returns from 2013-18.
Neal stated he was interested in seeing the IRS’s effectiveness in auditing presidents and vice presidents. The problems with Neal’s statements are Trump wasn’t president until 2017. What would be the purpose of seeing his 2013-2016 returns? Trump has so far resisted these requests, citing ongoing audits of taxes.
Can Trump’s taxes be forced to be made available to Congress? The answer would appear to be no.
An April 18 story in the Daily Signal by Hans von Spakovsky addressed the question. He referred to Section 6103 of the Internal Revenue Code guaranteeing the confidentiality of our tax returns. He also referred to a 1986 United States Appeals Court decision in National Treasury Employees Union v. Federal Labor Relations Authority. The judge stated taxpayer privacy is “fundamental to a tax system that relies on self-reporting.” The judge in that 1986 case? Current Supreme Court Justice Ruth Bader Ginsberg.
The more obvious reason is a political witch hunt. The Mueller Report has been released, and it arrived in the laps of Trump haters with an audible flop. Much ado about nothing. Twenty-two months of investigation, and no evidence of Russian collusion.
Failing to nail Trump on any collusion, Democrats have turned to other types of investigations. The Hill outlined the newest attack April 21, with House Financial Services Committee chairwoman Maxine Waters and Intelligence Committee chairman Adam Schiff seeking to take a deeper look at Trump’s businesses, under the auspice of seeking to investigate the ongoing issue of Russian money laundering.
Still fraught with shock from 2016, Democrats will continue their ceaseless investigations, whether circumstances warrant continuance or not. Let’s hope at some point we can move on as a nation.