Now that tax season is here, many people are preparing their taxes or meeting with their accountant to have their taxes done. Once all is said and done, many people are experiencing shock due to lower than expected refunds or even worse….owing money.
Why such a drastic difference? I thought the tax law was supposed to help? All in all, the tax law was better for most, and here is why.
Although many had a lower overall tax liability if their income was the same, refunds have drastically changed for most people. It is often tough to notice, but the withholding tables changed, lowering the amount you had withheld from your paychecks, even if you did not change your exemption amount. Although you were expecting a higher refund, this method makes more sense. Keeping more of your money throughout the year instead of loaning it to the government provides more flexibility throughout the year. It was often hard to tell because of income changes along with changes in benefits and 401 (k) contributions.
When all is said and done, the tax law turned out better for most of my clients. The tax law reduced the overall tax liability, all else equal, but some might have owed due to a reduced withholding. Even though accountants did not fully know the extent of the change, proper planning with your CPA should have prepared you for it. This is one of the many reasons why I suggest using a professional to assist you.
Trying to save a few bucks often costs you in the end.
I can be reached via email ([email protected]) or cell phone (973-879-9111). I look forward to answering any of your tax , accounting, and other financial questions and working with you in the future!
Andrew Kabatchnick is a local CPA that focuses on individuals and small to medium sized businesses. Along with assisting with taxes and accounting, Andrew helps with his clients overall financial health and well-being. Andrew lives in White Plains with his wife Leah and daughter Sophie.
