Doomsday for many
Sometimes death and taxes feel like the same thing, particularly when you get hit with a higher-than-expected tax bill.
With the filing deadline of April 15 looming, many taxpayers have extra heartburn as they adjust to the new tax laws enacted in 2017.
“Some are getting a little less than they’re used to,” said Robert Volpi, with the AARP’s tax preparation service at the Medford Senior Center, a service that is available for free for any age taxpayer. “Most are ending up with a refund.”
The IRS on March 28 reported that 84,075,000 returns have been filed so far, and the average refund was down slightly from $2,925 last year to $2,915 this year.
The total number of filers who received refunds is 65,836,000 compared with 67,599,000 last year, a drop of 2.6 percent.
In February, just after the government shutdown ended, early return statistics from the IRS showed the average refund was down almost 25 percent.
A massive tax-law overhaul in 2017 promised more money would go back into taxpayers’ wallets.
And many taxpayers did notice an increase in their take-home pay after the law took effect. According to estimates by the nonpartisan Tax Policy Center, the average reduction in individual income taxes is $1,260, though higher income earners benefit more.
But those paycheck increases were often too high, and many taxpayers now have to pay some of the increase back.
The IRS has alerted taxpayers that they need to make sure they’re taking the correct withholding so they don’t owe more money come tax day.
“We have a withholding calculator on our website that we encourage people to look at,” said David Tucker, spokesman for the IRS.
Some clues that you are not withholding the right amount of taxes from your paycheck include getting a large refund or ending up with a big tax bill from 2018. Many taxpayers have decided to opt for the higher standard deduction rather than itemize. For a single tax filer, the standard deduction jumped from $6,350 to $12,000 under the new law. Married couples saw their standard deduction jump from $12,700 to $24,000.
The new law also got rid of the personal exemption of $4,050 for yourself, your spouse and each dependent. Families can still claim a tax credit of $2,000 for each child under age 17.
Once you’re on Social Security, you typically pay less in taxes as well.
If you find you owe more taxes than you expected, you can always contribute to an IRA by April 15 to help offset your tax bill.
Generally taxpayers can contribute up to $5,500 to an IRA for 2018. For someone who was 50 years of age or older at the end of 2018, the limit is $6,500.
Tucker said taxpayers can receive an automatic six-month extension to file their returns. Even if you file the extension, you are required to make an estimate of how much taxes you owe and send that amount to the IRS by April 15.
Many senior taxpayers, who earn less than $13,600 annually, may not have to file a return.
The IRS has taxpayer preparation software on its website.
AARP is offering free tax preparation services throughout Jackson County at seven locations. You must bring a photo identification, all Social Security cards, your 2017 tax returns, W-2, 1099 and any other income or expense records.
David Argentsinger, who was helping prepare tax returns at the Medford Senior Center, said most of his customers are happy, but about 25 percent end up owing something.
He said he’s found a lot of California retirees who receive CalPERS, California’s public employee retirement system, who have discovered that it doesn’t withhold Oregon taxes.
Also many pensioners have not withheld taxes from other pension plans, which means you have to pay it at tax time, Argentsinger said.
Typically AARP’s free tax preparation can take anywhere from a half hour to three hours. Once a return is prepared, another tax preparer looks it over to make sure there aren’t any mistakes.
“We’re all about people not paying, if they don’t have to,” Argentsinger said.
Some taxpayers received welcome news.
John Im, a 66-year-old Medford resident, said, “We had the exact same income, but this year we’re getting a little more back.”
Im plans to take his $3,400 refund to pay for his $2,600 property tax bill.
He got his taxes prepared through the AARP program at the senior center.
“They’re very nice people,” he said.
Pat Hurley, a Medford tax accountant, said the most common mistake he’s seen is people not changing their W-4 statements to compensate for the new tax law.
“They get hit with a lot more taxes because of that,” he said.
Those who don’t have health insurance and didn’t apply under requirements of the Affordable Care Act got hit with a penalty, he said.
He said people need to look at their overall tax burden to determine whether they’re really paying more, rather than just looking at the amount they owe for April 15.
“People just look at one number and say, ‘I owe taxes,’ ” Hurley said.
AARP free tax preparation service available for all ages:
Eastwood Baptist Church, 675 N. Keene Way Drive, Medford. Walk-ins from 9 a.m. to noon, Wednesday and Friday.
Medford Senior Center, 510 E. Main St., Medford, from 9 a.m. to 1 p.m., Tuesday and Thursday. Appointments only at 541-772-2273, but currently there are no appointment times left, though you could be put on a list in case of cancellations.
Rogue Valley Mall, 1600 N. Riverside Ave., Medford. Walk-ins from 9 a.m. to 4 p.m. Monday and Wednesday, noon to 4 p.m. Thursday, and 9 a.m. to 2 p.m. Saturday.
Rogue Family Center, 3131 Avenue C, White City. Walk-ins from 9 a.m. to 1 p.m. Tuesday and Thursday.
Talent Library, 101 Home St., Talent. Walk-ins from noon to 4 p.m. Monday and Thursday.
The Grove, 1195 E. Main St., Ashland. Walk-ins from 9 a.m. to 3 p.m., Wednesday and from 9 a.m. to 1 p.m. Friday.
Upper Rogue Community Center, 22465 Highway 62, Shady Cove. Walk-ins from 9:30 a.m. to 1:30 p.m. Friday.
Reach reporter Damian Mann at 541-776-4476 or firstname.lastname@example.org. Follow him on www.twitter.com/reporterdm.