Monday, March 01, 2021

Millions of 2019 Tax Refunds STILL Not Issued

I found this article this morning:

"The Detroiter, who has been out of work during the pandemic, is expecting a tax refund of more than $4,500 for 2020 via direct deposit...She's hoping she'll see that money sooner than an anticipated refund for her 2019 income tax return, which is still hanging in limbo somewhere..."It's been over a year now," Brodis said. "They accepted my taxes last year on Feb. 7. It doesn't seem like it should go that slowly, but there's nothing I can do to speed it up." (emphasis added)

 Oh, but there is! 


Print out one of these:

Use the deductions worksheet on page 3, and note that lines 1 and 4 ask for ESTIMATES (so "guess" high! Enter the maximum amounts for everything you can here)

Carry line 5 back to the W-4 form, sign, turn in to your employer/HR department.

The strategy here is to get your per-paycheck withholding down as low as you can possibly get it, so you keep your "tax" money in your pocket ("tax", because if it's refunded to you, you never owed the tax, you just ceded control of your money to Uncle Scam for a year... or more). It might mean you end up having to write a check to Uncle Scam instead of receiving your own money back with no interest, but then you're not sitting around like this woman (and millions of others) wondering how you're going to pay for heat, food, rent, etc. Even better: when you are holding the money that you might actually owe, you can earn on it all year long before you have to fork it over to Uncle Scam. 

I know that there's many out there that use this ridiculous system of overpaying their taxes as a sort of forced savings, because they otherwise lack the discipline to not spend every dollar they get their hands on. I guess I can concede that it works ok for those kinds of people... until it doesn't! When Uncle Scam fails you and won't return your money, he offers no apology, suffers no penalty, and will not compensate you for your losses and inconvenience. For those of you going through this now, perhaps this pain is finally worse than the "pain" of disciplining yourselves and learning to save and invest on your own?

Sunday, February 21, 2021

The Employee Consumer Pays All Taxes

Probably due to the absolute lack of financial literacy education in U.S. public schools, there's a persistent mistaken belief that taxing "the other guy" more means that they are the ones paying the higher tax bill, not the people voting for the tax (which is often why they go ahead and vote that way). 

So your average person hears "raise taxes on corporations!" or property owners, or "the rich", etc., and they think, "yeah! Make THEM pay!"

They don't though. You do. 

The cost gets passed on to you in the asking price of goods and services that you buy, and in reduced wages (or wages that grow at a slower rate).  

The employee, uninvested consumer pays all taxes, period. 

That's what makes memes like this one I found this morning funny: everything in it is just basic fact, but it's that so many people are ignorant to this reality that makes it funny:

(I'm not sure if the pic got cut off at the bottom or if the creator did that on purpose; I was hoping that the final punchline would be that the added cost of rent and the wage cut/reduction of hours would total to $3000, lol.)

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