The Republicans boasted all last year that their new tax legislation raised wages and spilled bonuses for several million workers.
But now that the tax season is on us, several million Americans get an unpleasant surprise : a tax bill that they never expected.
Beth Callory from Long Island, New York, said she was pleased to receive more than $ 90 in each salary last year. Due to new lower federal income tax rates, Callori, a financial service provider, has lessened its federal revenues.
"I thought:" Wow, Trump is great, I love him, "said Callory.
But last week, Callory heard from her tax collector that she owes the federal government more than $ 5,000 ̵
"I almost fell out of my chair. I could not believe it, she said. I voted for Trump. I thought he would be good for this country, but when I got this phone call it's all I did. "
Calorie's tax bill rose for two reasons. One of them is that the law directly depreciated it by limiting deductions to state and local taxes, which increased the taxable income of Kallory, and added an additional grant to it.
The bigger reason lies in the fact that her employer kept her from her salary too little. The extra $ 90 she received has to be added to the amount that gets automatically socked away to cover the federal income tax. However, like most people, Callory did not fill out a work letter and filed it with the employer for a new W-4 form earlier this year. In the end, at that time, the Republicans continued to brag about the big salaries they gave to the American people.
"I thought, because I get it, I have the right to do this," said Callory.
Greater salaries, lower reimbursement
The vast majority of Americans received lower taxes from the new law, while only 5% or so were expected to see tax increases. Most people had to see changes in their salaries in February last year.
But the way the Trump administration applied the law has caused a particular problem – what the administration knew was that it would result in 5 million fewer households receiving tax rebates this year. So far, in the early tax period, which began at the end of January, the average compensation rate is by 8.7% .
The Treasury suggested that the reimbursement of taxes in any case be bad, since they are the result of people overpaying the government.
"Less reimbursement means that people are properly kept on the basis of tax obligations, which is a positive news for taxpayers," the representative said in an e-mail.
The problem is that wage reimbursement is not smaller. for this tax season in general less accurate.
Treasury stated that it is expected that the percentage of people who hold too many taxes in their salaries will decrease from 76 to 73 percent, but the percentage of retention does not exactly increase at all. Instead, the Treasury expects that the level of non-compliance will go from 18 to 21%. All these people are required by the IRS. The most at risk households are people with higher incomes, two employees, and slightly more complex taxes, especially households, used to describe their deductions. Instead of taking a standard deduction that reduces the taxable income at the set value, the bondholders will add that they spent on state and local taxes, mortgage interest and charitable taxes, instead deducting that amount. The Tax and Employment Tax Act significantly reduced the benefits of settlements and limited the deductions to state and local taxes.
But Trump's administration has decided not to make substantive changes to the retention tables that employers must use to make sure that everyone pays the proper amount of tax. The value of the "permissions" that employees can choose in the form of the W-4 to adapt their deductions was for many years before what is called the personal dismissal that the new tax law eliminated. Thus, they set the cost of permits for personal release last year and adjusted for inflation.
The formation of new forms would take at least six months, and it would be a difficult task for all.
"There is such a tension … You would like to get all the information you need to accurately calculate the retention, but it becomes very difficult for taxpayers," said Joe Rosenberg, researcher at the Tax Policy Center.
The administration could allow people to hold too much, rather than astonishing their accounts during the tax hour, Democrats said.
"It looks like the Trust Finance Ministry has spent 2018, the year of elections, losing people's wages due to non-compliance, and it has to be obvious that the bill will come to an end," said Sen. Ron Weiden (D-Ore.). in a statement on the eve. The IRS tried to warn people to check their hold. The agency informed the Government Accountability Office that he had released press releases and sent emails to lists of hundreds of thousands of subscribers. She contributed to the campaign to audit salaries on Twitter and Facebook, and officials spoke with the media.
"Make sure you have not received" messages may have been strangled by Congressional Republicans who boasted that their law was disturbing the economy and directly benefited millions of workers. They were kept under control by hundreds of firms that announced their employees awards, redefining every announcement in a series of press releases . Fox News worked overtime to remind people that House Speaker Nancy Pelosi had previously called bonuses a crummy.
Another problem that is not the fault of the Republicans is that, despite the fact that everyone pays taxes, far from everyone understands them very well. Less than half of Americans said they knew they could upgrade their W-4 at any time, and only 19% actually did so, according to a November survey by H & R Block. Twice more respondents said they had upgraded their W-2, which is actually a document prepared by employers, not employees.
In addition, some affiliates are surprised by the tax accounts simply because they did not understand that some of their money earned should be taxed. "They will have some kind of side work where there is no retention, and this creates a new tax liability," said Nathan Rigny of the H & R Block, pointing to the growth of the unemployed, such as Uber and Taskrabbit.
By closing down state and local tax deductions, Republicans knew that tax increases for their law would be concentrated on high taxes – which are usually headed by Democrats who use taxes to provide more social services.
But not just wealthy New Yorkers paid more.
Kurt Kromm is an electrician in Kenosha, Wisconsin, an area formerly represented by former Speaker of the House Paul Ryan (R-Wis.). Crom knew that he and his wife would pay higher taxes because of restrictions on state and local taxes, but he did not think they would have to pay more than $ 4,000 this spring.
Cromm has already indicated in documents W-4 that he had previously submitted to his employer that he was married and wants zero benefits, which means he kept as much as he could, without specifying an additional amount in dollars.
"I decided that I was married, and zero may be appropriate," said Cromm. "They did not spend any time to really get rid of a decent table for removal." After he realized how much he needed, he went to the calculator on IRS.gov and realized that he could or tell his employer that he would take an additional $ 80 a week, or just put a "single" on their W-4, because lonely people are faced with higher rates and, consequently, higher incomes. If he did it last year, he could have less money in every salary, but saved himself by the sharp increase in large payments.
But even the administration did not expect people to go to such lengths – in its modeling of how people would be violated, the IRS suggested that no one would adjust their W-4s.
It is unwise to expect that working people with a busy life begin the year, crunching figures on their tax deductibility with the severity of workaholic [certified public accountant]," said Vienna.
Beth Callory, for his part, said that she had previously chosen zero surcharges – plus she had an additional $ 130 deducted from each salary. It was not enough.
She said she loved Donald Trump. Not more.
"I really liked the things that he did before, and now I hate him," she said.