We Prepared You For This

The first articles have now hit the papers and as your Mason team predicted, the media and misinformed citizens are claiming “tax cut fraud!” Our observation is that the majority of our clients benefited from the tax cuts by paying less in federal taxes. In addition, most of our clients are taking the standard deduction rather than itemizing. Although deductions decreased for most of our clients, which resulted in a higher taxable income, the net tax bill was decreased due to the lowering of the various tax brackets. 

What has the public and media screaming, “tax cut fraud”? Many Americans will have to write a check in April 2019 rather than receiving the highly anticipated refund. Changes to the IRS W-4 in February 2018 increased America’s take-home pay in every paycheck. The changes to the W-4 resulted in an immediate cash flow benefit that was too high, which resulted in an under-withholding for federal taxes. Unfortunately, this will come as a surprise to many as the majority of Americans are misinformed with regard to income taxes. Their opinion of the tax code is thus based solely on the amount of their annual refund or shortfall.

Here's an example: