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Taxes are complicated even when you think they aren't or shouldn't be. If you're using this as a test of financial literacy I'd say that's not a valid test.
Taxes are complicated even when you think they aren't or shouldn't be. If you're using this as a test of financial literacy I'd say that's not a valid test.
The "test" is that so many people calculate how much they pay in income tax on the size of their refund and not what they actually pay.
You wouldn't believe how many people don't realize, and won't believe it even when they're told and shown, that their refund is actually their money to begin with. They think it's a gift of "free" money.
well, it is technically better to owe money than to get a refund. A refund is your own money coming back to you that you loaned freely to the government. It's a bad idea. At a minimum you could've taken that money and put in high yield savings and got a few bucks interest. $2000 at 2% is 40 bucks, may not be much but you can go and have a nice dinner with it instead of donating it to Uncle Sam.
Also, these people act like it's free money that they are "relying" on... which is ridiculous. It's money that they already earned that's being returned to them. It's not a grant from the government. Whether they get it upfront or in the end makes no difference whatsoever which makes them financially ignorant.
Yep. this is not free money.
The ideal situation is to get to the end of your 1040 and learn that you have to write the government a check for $50.
There is only ONE number you should be looking at to see if you are better off in 2018 under the new tax plan. Effective rate. Look at your effective rate compared to the prior year. Not marginal rate, not total taxes, not refund amount, not amount owed. EFFECTIVE rate. How to calculate it: Total taxes paid/Gross income. If you haven't done that, don't come back here griping about 'my taxes went up'. Because if you haven't done that, you don't know.
Anyone who has been around the working poor could have explained how messing with people's refunds would blow up. Many people may be financially illiterate, but this was predictable and stupid on the governments part. Mainly because no one asked for the interest free loan they give the government to be fixed. To find out after the fact that it was fixed for them, is a little frustrating.
Last edited by Pooks1976; 02-24-2019 at 01:42 PM..
The ideal situation is to get to the end of your 1040 and learn that you have to write the government a check for $50.
Yes and no. For many of John Q Public, it's forced savings which is never a bad thing. I'd rather get a small refund of a few hundred dollars, than have to write a check. But you're right - the best option in theory is if you have to write a small check.
Now expand this "reporting" to every single story "the news" covers and you'll see why CBS/MSNBC/CNN/Fox/etc lose credibility on pretty much anything they cover that they can slant to further their agenda.
I'm not a Trumpitier or Faux News or Rush follower at all but for god's sake I wish the MSM would report with an unbiased slant for once.
Warning....do NOT hold your breath while waiting for this to happen.
I stopped watching the news on TV years ago and get news from Reuters or AP, both of which offer RSS feeds which I can consolidate on my mobile devices. No one is stuck with any particular news source, and if you want unbiased news you can manage to get it or at least close to unbiased. That said, some people will claim any news they don't like or agree with to be fake news. @@
wow, tons of assumptions
So I'm not going to call these folks "ignoramuses" maybe I am one too. I admit I most definitely do not understand our tax code.
Ignoramus is spot on.
If less taxes are deducted from your paycheck, then, logically, it stands to reason your tax refund will be less, because you paidless in taxes.
A person so devoid of logic that they cannot reason this out is truly an ignoramus and really shouldn't be allowed to vote.
At the very least, those persons should consider giving their high school diplomas back.
How is it even possible one can be graduated from high school and not understand that if you pay $3,000 less in taxes, your tax refund is less.
You can't get a refund on what you didn't pay (unless you happen to qualify for the Earned Income Tax Credit).
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