5 Surprising Reasons Why Your Tax Refund Is Smaller (2019) Attorney, CPA, Professor Steven Melnik

5 Surprising Reasons Why Your Tax Refund Is Smaller (2019) Attorney, CPA, Professor Steven Melnik


hey everyone this is Steven Melnik and
welcome to Happiness Amplified Q&A asking for advice on the Internet can be a
mixed bag you never know who’s answering you Steve Melnik has spent over 20 years
as a lawyer professor CPA and success coach and now
he’s here to answer your questions this question comes from Ed Burgundy one on
middle-class ioad when I usually get a refund my accountant says changing our
withholding will not change the outcome she also said that majority of her
middle-class clients had to pay this year well this is a great question and
the one I’ve been seeing more and more recently specialist people start getting
their returns back and as I arrest disclose statistics that on average
there is a decrease in 17% in refund that people are getting so natural
question WTF what’s going on why are we getting less refund back I’m here to
share with you five likely reasons why your refund could be less but before I
go to top five reasons or five likely reasons I just want to tell you what’s
possible and you need to check with your employer it’s possible if your employer
during the year starts withholding last taxes from you because as you get the
check as you know there are withholdings all these crazy amounts of taxes
sometimes you wonder why am i working at this point because you think you’re
making this much money you get a check and you look at it like what the hell
where’s my money so check with the employer first because it’s possible
that for whatever reason your employer started to start it started with holding
less money because if your employer withholds less money during the year of
course your refund is gonna be smaller it may may not be the case in your
particular case but I suggest you double check before you drive yourself
completely nuts but here are five possible reasons why
your refund is less so let’s start with number one depending where you live if
you’re in high property tax whether it’s New York or California or
New Jersey well you probably getting screwed why well because you used to be
able to take a deduction called itemized deduction for the total property taxes
that you paid and the total state income taxes that you paid and it was all
beautifully deductible well guess what the new law limits maximum ten thousand
dollars by the way if you’re living in the state where there is no income tax
like Florida taxes they like you combine your property taxes with your sales
taxes but the total still cannot exceed ten thousand dollars so for those of you
who used to enjoy the beautiful benefits of living in a beautiful place paying a
lot of property tax a lot of state income taxes and you used to be able to
deduct it and therefore pay less and federal income tax and therefore get
bigger refunds guess what the game is up and the government now limits your
federal tax deduction total ten thousand dollars so that’s one possible reason
why your refund could be less the second possible reason is if you have home
equity line okay you have a home but you decided to borrow money and you decided
to use for whatever you want it’s true you could use the money for whatever you
want but the new law says if you use the money for anything outside of improving
your home home equity loan interest on home equity loan is no longer deductible
so those of you who had home equity loan and used to pay interest paying interest
guess what 2018 on no longer deductible unless again they use the money to
improve the house like you know building better kitchen or changing the floors or
whatever makes your wife or husband happy because that’s very important more
important than taxes you’re ready for the next one so here’s the next big one
and that’s number three if you are an employee you get crushed because if you
have any unreimbursed expenses what expenses can you have as employee
that are not reimbursed I don’t know but if you travel for business for your
employer and they don’t reimburse you for every reason guess what no longer
deductible so that could be travel expenses that could be subscription for
some professional magazines that could be attendance of some conferences it
could be traveled for business it could be even the use of your home for office
okay very important if you’re an employee okay
unreimbursed expenses no longer deductible so keep in mind although
there’s a little thing to keep in mind interest on your mortgage okay in
property tax is not considered to be unreimbursed employee expenses they’re
known as otherwise the doctor but you could deduct them anyway so it’s really
all these out-of-pocket expenses that used to be deductible or even travel to
work and from work in situations where it is permissible no longer deductible
so that’s a big hit and has the third possible reason why your refund is small
possible reason number four is if you think mortgage insurance mortgage
insurance no longer deductible that’s a new law that could impact the amount of
refund you get and possible reason number five which could be the biggest
reason for some people it used to be it used to be that for every dependent that
you have whether it’s a child wouldn’t your parent whether it’s somebody else
you would get a tax break known as exemption somewhere around four thousand
dollars the amounts change from year to year as of 2018 guess what you can no
longer get this exemption for your dependents okay now the government
instead did something really big they gave the gobbled as a general
proposition they doubled amount of standard deduction
so usually people you know if you’re married filing let’s say jointly you’re
husband and wife file together you used to get somewhere around $12,000 now you
get somewhere around $24,000 as a standard deduction so it’s double big
amount but you no longer get deduction about four thousand per child per
dependent and that could to have different impact for different people so
if you have a lot of children okay and if the total let’s say if you had I
don’t know eight kids okay so that’s what thirty two thousand dollars around
there you may be able to get an adoption two thousand eighty no more you just get
twenty four thousand about standard deduction okay now some people who can
actually benefit if you have just one child to you know you may be better
often and and for some people actually was beneficial and they paid actually
less taxes so again it’s so very personal very unique so these are five
possible reasons why your refund could be smaller and I guess for many of you I
know you’re looking forward to refund actually getting refund from financial
perspective is a big mistake because refund let’s just examine it for a
second what is refund refund stands for the fact that during the year you paid
more than you were supposed to to the IRS okay you paid more than you were
supposed to so at the end of the year once you total everything out government
gives you money back but what does it mean it means that you gave the money to
the car you didn’t have to give and the garment used it you didn’t get to use it
you could have just simply set aside even in the bank account make some
interest or invest it or do something with it
so actually from financial perspective from financial perspective refund is a
bad thing okay now psychologically it feels good
to get refund no question about it completely understand and practically
speaking could be good thinkers for some people again that’s the only way to save
money but if you get yourself into discipline or setting aside certain
amount actually financial you’ll be better off because if you use the money
to invest or at least to make interest you get a bit more than you would
otherwise so I hope this is helpful because this
is the possible five reasons why you may be getting less refund if you have any
questions you’d like Stephen to answer tweet your questions to at Steven
Melnik on Twitter and for more Q&A videos find us on youtube at Steven
Melnik Happiness Amplified and as always please give us a like comment and
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