Taxpayers Say the Darndest Things

Significant changes to tax law took effect in 2018. I heard some interesting comments from clients. Some didn’t believe taxes went down because their refunds didn’t increase. To be fair, taxes did go down for most people, but so did tax withholding from paychecks, keeping many refunds level with prior years. I guess people didn’t notice the extra take home pay. 

The other thing I sometimes heard was that they thought their tax return would fit on a single piece of paper. That one made me chuckle because all of the lines eliminated from Form 1040 found their way onto a handful of new schedules, making for more pages than ever.

What might preparers hear and see this year?

1. Clients will show up with clipped articles about the changes, just to be certain we don’t miss anything.
2. Younger clients will complain about not being able to take the new $6k/$12k deduction for seniors. Some may try to furnish false birth dates. That doesn’t work because the IRS knows when you were born.
3. Taxpayers with no tip or overtime income to deduct from their taxable income will curse those who do. 
4. Someone will buy a new car, not understanding the difference between a tax credit and a tax deduction. “I’m supposed to get $10K back for the interest on my new truck?”
5. Some will cheer lower taxes and moan about the deficit in the same breath. 
6. A few might even notice how long and confusing their tax return has become. 
7. Finally, some will be upset that the price of preparation increased. Well, new laws mean additional work for preparers, which translates into higher fees for taxpayers. 

Of course there are the recurring questions we hear every year.

1. “I’m filing as head of household,” a client told me.

You can’t be head of household,” I explained. “You don’t have any dependents”.

“Yeah, but I’m still the head of my household.”

2. Why does my friend get a bigger refund than me? We have no idea why, and if we did, we are not allowed to tell you. 

3. That income doesn’t have to be on my return, they already taxed me on that! We often hear this one when a worker takes an early withdrawal from a 401K and has tax withheld, or when a casino withholds taxes on a jackpot. 

Feel free to add to the list.