Understanding Changes To The Tax Code
MICHEL MARTIN, HOST:
I sincerely hope this isn't the first time you're hearing this, but the deadline for filing your annual tax return is tomorrow. And this is the first tax season that will be affected by the passage of the Tax Cuts and Jobs Act of 2017.
With the new changes to the tax code, it feels like we're all first-time filers this year. So to catch up with the changes and what they mean, we've reached out to Kay Bell. She is a financial journalist. And she writes the blog "Don't Mess With Taxes," which she says translates taxes into money saving English. And she's with us now from - where else? - Austin, Texas. Welcome. Thank you so much for joining us.
KAY BELL: Thank you for having me.
MARTIN: So let's jump in. What is different about taxes this year since the passage of the Tax Cuts and Jobs Act? What will people notice the most?
BELL: The first thing they will notice is there is a new form. Lawmakers promised us a postcard-sized tax return. It's not quite there. It's a little bigger than a regular postcard. But there's only one smaller form now instead of what used to be three forms. The bad thing about that is that in addition to this one smaller form, there are now six different schedules. So depending on what your tax situation is, you might have to file several different forms whereas in the past, maybe you only had one 1040 that you had to deal with.
MARTIN: Who benefits from the not quite a postcard, almost a postcard? And who is subjected to all those different schedules?
BELL: Well, you know, taxes are intensely personal. So you might have to fill out just the small form, whereas if in the past, you used the 1040ez, you'll use the new simple 1040 and be done with it. But if you had income other than W-2 income from an employer - say you had a side job, a gig job driving for one of the car services on the side - you're going to have to fill out one, two, maybe three forms. So it's a little more complicated. But they say it was a tradeoff to get us to a lower tax rate and broader tax - income tax brackets. So most of us end up paying less tax in the end.
MARTIN: Now, you talk with a lot of CPAs for your blog. What are they telling you about what their customers are telling them?
BELL: Well, they have some customers that are not happy that they're not getting as big of a refund as they used to. And there's a long story as to why that happened. Those who file early tend to be people who expect larger refunds. And when that didn't happen this year, we heard about it. You know, they complained loudly and on social media.
And the problem is that when the new tax law went into effect, it changed the withholding, which meant a lot of people - most people - got more money back in their paychecks. Unfortunately, a lot of people didn't notice it or they had other expenses that went up and absorbed this little bit of increase or they just didn't think about it because nobody thinks about taxes really until they get around to filing their return.
In addition to tax refunds being a little bit smaller, we're seeing that people aren't filing as quickly this year. And in fact, the IRS says they expect around almost 15 million people to file for an extension this year. And that's almost 5 million more than usually file for an extension every tax season.
MARTIN: So finally - so I'm guessing because, you know, your Twitter bio says that you are a tax geek, what's it been like for you this last couple of months of tax season? Are your friends and relatives, like, showing up at your house at odd hours with their forms...
BELL: It's been great. I mean...
MARTIN: ...Looking really upset? What's it like for you?
BELL: It's been great. I love it. I mean, taxes are nerve-racking anyway. Then you add change, which any kind of change, even if you want it, is frustrating. So you add those two together, and it can get really hectic. But I've been doing this for a long time. It's fun to see some changes made. And there are some good changes in this tax bill.
But it has been crazy. And people are a little worried. They just want to make sure they understand it, you know? Nobody wants to make the IRS mad. They want to make sure that they are getting all they can out of the new tax laws and that they are getting what they deserve.
MARTIN: That's Kay Bell. She is a journalist. She writes the blog "Don't Mess With Taxes." And she was kind of to join us from KUT in Austin, Texas. Kay Bell, thanks so much for talking to us.
BELL: Thank you.
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