Did you warn your 1040 clients about withholding, last year?

I had one client become a bit agitated today. Last year they got a $200 federal refund, and this year they owe $2500. Of course they don't remember the $500 per month less withholding that showed up as increased take-home in their paychecks all year long.

I have to admit, even though a year ago I warned clients in general terms that things were going to be changing for 2018, I did not adequately analyze the change in withholding and the compounding effect of loss of personal exemptions and SALT cap.

So how did you guys/gals handle this over a year ago? Did you compare the old vs. new withholding rates along with the other changes -- and advise your clients to adjust their W-4 to try to maintain their refund expectation?

I warned them and offered a new tax planning service. Only one person was interested.

if you only had one client complain so far obviously you did a great job advising last year. if you gave clients a general warning i think that's reasonable. if you were to do a more precise analysis they would have had to pay for you to do a projection and most clients won't pay for that.

I warned all my clients last year once the new withholding rates were released late Feb. I offered to help them correct the W4 forms. I ran what if scenarios.

I still had a few clients complain and then I just reminded them that "I had spoken" but they chose to ignore me and now they must face the consequences

I had one client become a bit agitated today. Last year they got a $200 federal refund, and this year they owe $2500. Of course they don't remember the $500 per month less withholding that showed up as increased take-home in their paychecks all year long.

I have to admit, even though a year ago I warned clients in general terms that things were going to be changing for 2018, I did not adequately analyze the change in withholding and the compounding effect of loss of personal exemptions and SALT cap.

So how did you guys/gals handle this over a year ago? Did you compare the old vs. new withholding rates along with the other changes -- and advise your clients to adjust their W-4 to try to maintain their refund expectation?

I did not and I don't view that as our job per se.... it has been a difficult discussion for sure BUT I have a theory that it is political. The IRS wanted this to happen to embarrass Trump.

>> The IRS wanted this to happen to embarrass Trump.

Don't blame IRS. IRS does not make law. Blame our politicians if you must. I agree the withholding rates should have been left alone and folks would have gotten a bigger refund and be happy

>> The IRS wanted this to happen to embarrass Trump.

Don't blame IRS. IRS does not make law. Blame our politicians if you must. I agree the withholding rates should have been left alone and folks would have gotten a bigger refund and be happy

Understood but after the Lois Lerner scandle... anything is possible. I am not sure who is in charge of changing the withholding tables.

I didn't consider any political aspect of the withholding changes, other than the fact that it put billions of dollars of spending money into the economy. They know that 99% of the population will spend every extra dollar that shows up in their paycheck.

… BUT I have a theory that it is political. The IRS wanted this to happen to embarrass Trump.

Politcal, yes. A tactic pushed by proponents to make tax reform look like a great thing for Joe Paycheck. As with most things political it was short-term.

I warned them to some degree but probably should have more. But at the end of the day, many of my clients are happy. When there is a surprise, I show them the side by side comparison of 2017 and 2018 and they understand.

I warned them and offered a new tax planning service. Only one person was interested.

Exactly the same. I gave everyone an idea of what the tax change would be during the tax review, but warned them to watch their withholding.

it has been a difficult discussion for sure BUT I have a theory that it is political. The IRS wanted this to happen to embarrass Trump.

They wanted to change withholding to put more money into paychecks immediately. Just because the piper is being paid for now doesn't mean that it's a deep state IRS conspiracy.

I did not have direct discussions with any, but sent out basic information indicating what would be occurring. Not one asked me to help adjust their withholding. None have really complained either, once I again explained their take-home pay increased around February '18.

My clients do not like to do tax planning unless I am heavily involved in their businesses. For the most part, they do as they wish and then complain about amount due or lesser refund. Such as taking early distributions from an IRA and not doing any withholding, or grasping how quickly the 10% penalty adds up.

I warned them and offered a new tax planning service. Only one person was interested.

Exactly the same. I gave everyone an idea of what the tax change would be during the tax review, but warned them to watch their withholding.

it has been a difficult discussion for sure BUT I have a theory that it is political. The IRS wanted this to happen to embarrass Trump.

They wanted to change withholding to put more money into paychecks immediately. Just because the piper is being paid for now doesn't mean that it's a deep state IRS conspiracy.

The spin in the media is that the tax changes "HURT" the average Joe. If Trump walked on water , the press would publish his inability to swim and inability to help the boating industry.

I warned them to some degree but probably should have more. But at the end of the day, many of my clients are happy. When there is a surprise, I show them the side by side comparison of 2017 and 2018 and they understand.

That's what I did with mine. Those hit the hardest have been under withholding for years and it finally caught up to them. You can't get a $70,000 plus retirement income and withhold less than 10%, especially if your spouse is bringing in $30,000 plus and you have additional retirement income of $12,000 and you're unable to claim your under achieving adult daughter this year. I had them open up a HSA (they were harder hit with the ACA) and got their taxes down considerably. They are already going to be using most or all of the 2018 contribution in a few weeks.

The other client that was hit hard went from MFS to S because of her husband's death. Add that her income was $20,000 plus more and for years her husband under withheld. Her son is taking over her affairs.

The bigger question is what are you doing with taxpayers who had under withholding in 2018 and got saved by the 80% limit. I am telling those folks that they MUST change W-4 or else keep their mouth shut and not complain next year.

I ran a report of all my balance due clients and they will get a follow-up reminder after tax season

The bigger question is what are you doing with taxpayers who had under withholding in 2018 and got saved by the 80% limit. I am telling those folks that they MUST change W-4 or else keep their mouth shut and not complain next year.

I ran a report of all my balance due clients and they will get a follow-up reminder after tax season

As I go, I'm identifying people who need to change their withholding. I figure they'll listen to me now when they see the end result, but if I wait until next month it will not have the same sense of urgency until next March...

For the most part, they do as they wish and then complain about amount due or lesser refund. Such as taking early distributions from an IRA and not doing any withholding, or grasping how quickly the 10% penalty adds up.

I've heard "I cashed in my retirement but it's okay because they took the taxes out already" often enough in my career that when I hear it, my hand instinctively reaches for the box of Kleenex.

The spin in the media is that the tax changes "HURT" the average Joe.

Clearly we must be reading from different media outlets.

Clearly we must be reading from different media outlets.

Perhaps, but I remember it being a big conversation piece about a month ago. A simple google search fills the screen with the news.


https://www.npr.org/2018/08/01/63447426 ... eport-says

https://www.nbcnews.com/business/taxes/ ... nd-n969366


https://www.cbsnews.com/news/millions-o ... -for-2018/

https://www.washingtonpost.com/business ... 5785b4dcdc

Clearly we must be reading from different media outlets.

Perhaps, but I remember it being a big conversation piece about a month ago. A simple google search fills the screen with the news.


https://www.npr.org/2018/08/01/63447426 ... eport-says

https://www.nbcnews.com/business/taxes/ ... nd-n969366


https://www.cbsnews.com/news/millions-o ... -for-2018/

https://www.washingtonpost.com/business ... 5785b4dcdc

In the beginning yes, the stories were more about those hurt, now I am seeing stories reporting the opposite

Southpark, did you read the articles that you linked? Please just read the NPR one and tell me how that fits into "The spin in the media is that the tax changes "HURT" the average Joe."

I also read the Washington Post one, which was for sure talking more about people being upset, but it does explain multiple times that people got a tax cut, it's just already received by the taxpayer.

In the beginning yes, the stories were more about those hurt, now I am seeing stories reporting the opposite

I've seen some stories talking about how later-in-the-year refunds are higher this year than last year.

Clearly we must be reading from different media outlets.

Perhaps, but I remember it being a big conversation piece about a month ago. A simple google search fills the screen with the news.


https://www.npr.org/2018/08/01/63447426 ... eport-says

https://www.nbcnews.com/business/taxes/ ... nd-n969366


https://www.cbsnews.com/news/millions-o ... -for-2018/

https://www.washingtonpost.com/business ... 5785b4dcdc

In the beginning yes, the stories were more about those hurt, now I am seeing stories reporting the opposite

Agreed.... first two weeks or so were , in my memory, anti-new tax law. Once facts were used, that subsided and was replaced by a withholding issue as it is.