New Tax Laws Giving Many People Sticker Shock And Smaller Refunds
NEW YORK (CBSNewYork) – With the government shutdown over and the IRS back to work, tax season is officially in full gear.
That's usually good news for families looking forward to a big refund, but many taxpayers are getting some serious sticker shock this year – thanks to the government's new tax laws.
"We will make sure the benefits are focused on the middle class," President Trump said when the tax reform measures were introduced last year.
Many middle class Americans like Melissa Velez of Mount Vernon were optimistic, but now that it's time to file...
"It's a slap in the face," Velez told CBS2's Hazel Sanchez.
"You work the job to have everything taken out in hopes that at the end of the year when you file your taxes you can get something back… Now there's nothing."
Velez, an executive assistant for Major League Baseball, filed early with her usual plans for what to do with money she'd get back.
She filed for the government's standard deduction – which is now a $12,000 credit for taxpayers - and her return was nearly cut in half.
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"I usually pay the house insurance, car insurance, and that still leaves me extra to go on a nice vacation. I'm not going anywhere this year," Velez explained.
"This tax season is probably going to be the worst tax season ever," Patrick Daly said.
Daly is a certified public accountant and says it's also been tough for accountants trying to navigate the new rules.
Daly added that many taxpayers like Velez are understandably getting sticker shock; not being aware of how the new tax rules were changing their paychecks.
"They adjusted the withholding tables and by adjusting the withholding tables people were getting an extra 50, 75, or $100 in their paychecks - not realizing it - and now their refunds are going to be adjusted by that amount when they file their tax returns," the CPA explained.
Daly suggests filing a new W-4 and adjusting your employer's withholdings.
"Your goal should be to basically have your numbers come out flat. You don't want to be way overpaid, to give the government an interest free loan. And you don't want to be underpaid that you have to pay."
Velez says she's glad she doesn't owe the government and will just have to budget differently this year.
"I'm a coupon cutter anyway, but it's probably gonna take it up a notch," the Mount Vernon resident said.
She's hoping she'll still find a way to take a vacation, even without a bigger tax break.