In our words: Tax return strategies and President Trump’s dangerous rhetoric

THE ISSUE

With tax season now in full swing, the Internal Revenue Service reports that the size of the average federal refund thus far is down 8.7 percent. Filers saw an average refund of $2,135 last year and this year’s average refund has been about $1,949. But tax refunds (or bills) can vary. In a story headlined “Tax season shock” in last weekend’s Sunday LNP, staff writer Jeff Hawkes wrote, “The fact is, your tax preparer is probably not to blame. And while the average refund is smaller, the tax reform law that took effect in 2018 has some tax filers receiving bigger refunds than ever.”

“Your goal is to get a zero refund at the end of the year.” That quote stood out to us in Hawkes’ story. It’s from Amanda Taraborelli of Manada Tax Service in East Hempfield Township.

Certainly, some have philosophical differences when it comes to tax strategies. Some love that big refund check in the spring. But we think the better strategy, and Taraborelli agrees, is ... well, we’ll let her explain it fully:

“I don’t like to give the government any more free money than they already get. Your goal is to get a zero refund at the end of the year. That way you get your money to spend through the year as you wish, and don’t give the government an interest-free loan.”

The Tax Cuts and Jobs Act of 2017, signed by President Donald Trump in December 2017, cut individual income tax rates and doubled the standard deduction, while eliminating personal exemptions and most itemized deductions. CNN Money estimated that the overhaul gave the average tax filer in Pennsylvania a tax cut of $1,330.

But there’s a catch with that. Depending on how withholdings were adjusted following the tax overhaul, some workers got their tax cut a little bit at a time, in the form of slightly higher paychecks throughout 2018.

So the tax cut hasn’t necessarily shown up as a “bonus” this winter for the first wave of tax filers.

“And that can be painful for those who had plans for the hundreds of extra dollars they were expecting in their refund,” Hawkes wrote.

Painful, for sure. But we don’t think it should be a surprise.

This may sting to read — and we’ve been in the same situation ourselves — but this is a problem many have created for themselves through unsound financial planning.

Some count on their tax refunds for home repairs or upgrades, for major purchases, for a little vacation or, more crucially, for paying off debt or property taxes.

“The truth is, many Americans have come to rely on refunds,” wrote The Associated Press’ Sarah Skidmore Sell. “About three-quarters of U.S. taxpayers typically get one and they had averaged around $2,800. For some low-income households it is the biggest cash infusion of the year.”

We get it. But it’s such a risky proposition. Especially when counting on an annual windfall while navigating byzantine and ever-changing tax laws.

We recommend the less risky, conservative approach.

To get closer to that zero owed/zero refund scenario that provides the most money throughout the year and lessens (a little bit, anyway) stress during tax season, talk to a tax accountant or Google “how to get zero tax refund.” There are plenty of reputable online articles and calculators offering solid advice.

And now is the time to do it for next year’s taxes, before too many 2019 paydays — with potentially incorrect withholdings — come and go.

Writing this month on Investopedia, Amy Fontinelle states: “It sometimes takes considerable effort to figure out what amount you should really have withheld from each paycheck. ... However, a couple of hours now can either increase your monthly cash flow for the rest of the year or save you from an unexpected bill at tax time. Having money now is more valuable than having the same money in the future.”

A little bit of planning can make your finances a lot better.

Go for that zero.

Not the enemy

If the president of the United States is going to keep saying it, we will keep pushing back.

On Sunday, President Trump tweeted: “THE RIGGED AND CORRUPT MEDIA IS THE ENEMY OF THE PEOPLE!”

On Wednesday, Trump tweeted “The Press has never been more dishonest than it is today. Stories are written that have absolutely no basis in fact.” And in another tweet he called The New York Times “a true ENEMY OF THE PEOPLE!”

The president’s statements are untrue, make life more dangerous for journalists and represent a serious threat to our democracy, in which a free press — guaranteed in the First Amendment — is an indispensable component.

New York Times Publisher A.G. Sulzberger stated: “The phrase ‘enemy of the people’ is not just false, it’s dangerous. It has an ugly history of being wielded by dictators and tyrants who sought to control public information. And it is particularly reckless coming from someone whose office gives him broad powers to fight or imprison the nation’s enemies.”

And then there were the poignant words this week of Rachael Pacella, a reporter for the Capital Gazette in Annapolis, Maryland: “As one of six survivors of our nation’s only newsroom mass shooting, seeing generalized media-bashing tweets from the president makes me fear for my life. His words have power, and give bad actors justification to act.”

And there are “bad actors” out there. A U.S. Coast Guard officer and self-identified white nationalist was arrested last week on drug and gun charges while prosecutors gather evidence to support domestic terrorism charges. The Washington Post reports that, “as part of his plot to ‘kill almost every last person on the earth’ ... (he) compiled a hit list of prominent politicians and cable TV journalists.”

These are dangerous times. We implore President Trump to stop using such inflammatory and divisive rhetoric. The media are not the enemy of the American people. We are the American people.

Crédito: THE LNP EDITORIAL BOARD