A meeting with the tax lady

My wife and I had our annual tax appointment with the same accountant that she has had for 20 years. A few quick observations.

Our refund amount was pretty decent- around $1,500 each for state and federal. That's not unusual for us, given that we pay a decent amount of mortgage interest and property taxes, and because of my student loan interest and because both of us will give some to various causes (or just unload our crap to Goodwill). Of course, laws for the 2017 tax year really didn't change much, so there weren't a lot of surprises in yesterday's filing.

Talk inevitably turned to what we might want to adjust as a result of the GOP's tax law changes that might affect our filings next year. She agreed that we would likely not take many of these deductions next year, since the married couple's standard deduction will be increased to $24,000, and that will be more than the deductions we would take, given that the SALT (state and local tax) deduction will be limited to $10,000.

I also mentioned that some of our charitable donations were jammed in at the end of 2017 because of that change, since they wouldn't be written off if donated in 2018. Our accountant nodded and said "Yeah, we've seen a lot of that. Property taxes as well." Not surprising, but could be something worth keeping an eye on as we see revenue figures in the next 3 months.

Because while pre-paying taxes and shoving donations into 2017 vs 2018 will mean larger refunds, it also means lower-than-predicted revenues for state and federal governments in this Fiscal Year. Let's see if that pre-paying effect blows up the federal deficit sooner than expected, and eats away at the already-dwindling budget cushion that we have in Wisconsin.

Also, I mentioned that when the tax cuts hit my paycheck, it meant that about $1,000 would not have been sent to Washington if that continued for the rest of the year. The problem is that I was certain my wife was also on track to have an extra $1,000 taken out (maybe more- she makes more than me). While that might be nice now, it would suck when we filed next year, since tax calculators such as this one indicated that we would only get a tax cut of $900-$1,000 total, between the 2 of us.

Basically, if we didn't adjust our W-4s and lowered the amount of exemptions, we might have to write a check this time next year, or at least get a much smaller refund. I recognized this early, and have already adjusted my withholding so that a little over $400 more will be taken out the rest of the year, and my wife already withholds an excessive amount because she prefers the higher refunds. But our accountant noted that a lot of people aren't going to recognize this situation, and end up with a bad surprise in early 2019 when they file their taxes.

So we'll sit tight and wait for our refund to come back some time in March, and sock away some funds to pay for bills and projects that will inevitably come up in the next few months. But if you haven't filed yet, I'd highly recommend you give an extra look at your return and the deductions you might take, and find out which ones you might not get when you file next year. Also take a look at your recent paycheck stubs, compare it to what you had before the GOP's tax cuts hit in February, and then figure out that change for the entire year. If the increase in your paycheck is higher than your tax cut, you might want to grab a W-4 form of your own, before the GOP's tax cuts bite you back in early 2019.