topic Taxes in Retirement tax questions

Taxes

sethornton51 — Tue, 22 Dec 2020 01:11:25 GMT

In 2018 I got a refund of approx. $500. My income increased by 2K in 2019, but I owe nearly 8K in additional taxes! In 2019, my withholding was a little larger than 2018 so why such an increase?

Re: Taxes

xmasbaby0 — Tue, 22 Dec 2020 01:21:35 GMT

Are you referring to the 2017 tax year refund that you received in 2018? The tax laws changed drastically after 2017. For the 2018 return--which you filed in 2019, and for your 2019 return which you filed in 2020, your standard deduction nearly doubled.

No one in this user forum can see your tax return or your screen. There were major tax law changes that began with the 2018 tax year that seem to continue to surprise some people. Personal exemptions of over $4000 per person were removed beginning with 2018 returns.

One thing that may be affecting your refund is that employers began withholding less tax when the new tax law passed. Your paychecks were more, but that means a smaller refund now.

There are a lot of variables that affect your refund or tax due including how much you earned, how much tax you had withheld, your filing status, the number of dependents you claim, your deductions and credits, etc. You may have lost Earned Income Credit or the Child Tax Credit— did a child turn 17? If you received the EIC last year, remember that changes in the amount you earn have a big effect on the amount of EIC you can get. (Sometimes earning more money means less EIC) Are you 65 or older ? If so, your standard deduction is higher. Everyone has a higher standard deduction now so it is harder to use itemized deductions.

And of course, always check your own data entries, looking for errors such as misplaced decimals or extra zeros.

https://ttlc.intuit.com/questions/1901008-why-did-my-refund-go-down-compared-to-last-year-s

Print out 2018 and 2019 and compare them side by side to see what is different. The lines are different so it is tricky---but with careful attention you may spot the reason for the difference.

Re: Taxes

sethornton51 — Tue, 22 Dec 2020 02:30:16 GMT

I am 69 now so I was older than 65 for 2018. In 2018, I was claiming 3 grandchildren as dependents and only 1 for 2019 so that would account for some of the increase. I was seeing on the 2019 form that some of the deductions that contributed toward my refund in 2018 were no longer being allowed for 2019(investment expenses). I will compare the adjusted gross income for both years first before doing a line by line comparison. I guess that I am having a "sticker shock" reaction. I knew that I was going to have to make an adjustment in my with holding amount due to fewer dependents. I just was not prepared for such a drastic change. I will look for any mistakes that I may have made. Thanks for your help