Reply to Just did taxes...annoyed. Other people in the same boat?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]

[b]It has always been the case that dual income households need to review the withholding tables and adjust accordingly. [/b]The issue this year is that, with no changes to to their W4s, an unprecedented number of taxpayers went from being overwithheld to being underwithheld. That's an issue with the withholding tables.

The fact that the IRS is temporarily lowering the safe harbor threshold to waive the underpayment penalty for some taxpayers and is, for the first time, allowing employees to adjust their W4s up until May 2019 if they find, upon filing taxes, that they underwithheld suggests they themselves agree that the 2018 tables have issues.

It's also worth noting that even for those who were so inclined--I usually run our taxes mid-year since I am self-employed so that we can adjust the last two estimates--there was no way to see the draft tax forms until the fall, so even if you did do this and discovered at that point that you had underwithheld significantly, there wasn't much time to correct it. We bumped up our last two estimates and threw additional money into the final couple of months of payroll withholding for DH so we will only owe a few hundred (with a total tax liability that's about the same as last year since the SALT changes wiped out any gain from the tax cuts for us), but many people are just finding out now.[/quote]

Yes, but most people, even high earners, don't do that.  They don't review the withholding tables.  They just guesstimate adjusting their taxes if they owed a lot the previous year and then they just add money based on what they owed last year (e.g. "we owed $5, so we each withheld $200 extra a month").  I ran our taxes a few months before the end of the year using the tax brackets shown above and the tax calculator on the IRS web-site.  They were rough estimates, but I used them to tweak our taxes.  We will get about $500 back federal and $1000 back state, so it worked pretty well, getting that close considering the changes.[/quote]

PP you're quoting, and to be clear--my point was that you shouldn't have to review the withholding tables every year. That's just something you do when you start a new job to ensure you're withholding adequately. After that, if you don't change anything on your W-4 and your income doesn't change, you should be able to reliably assume that your refund or payment will be similar to what it was the year before, even if tax rates and withholding rates change (as they do each year). The fact that this was not true this year speaks to issues with the tables--it's not just because "that's how withholding tables work." [/quote]

You are spot on!    I wish I could say it was just incompetence - but I believe there was political motivation associated with it..... and there should not be.[/quote]

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