Doing Your Taxes? Know These New Tax Rules
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With your money briefing, I'm J.R. Whalen at The Wall Street Journal in New York. It's tax time, and that means many of us are doing our own taxes or gathering up receipts to bring to the accountant. It's also the first year the new tax law takes effect in our tax returns. We've got some key points of the law to watch out for in a moment. First, these money and market stories you should know. Legislation introduced on Capitol Hill would lessen the nasty surprise of hidden fees in your cable TV bill. If it becomes law, cable companies will be forced to be more clear in their billing. Among other things, alert a consumer of any price increase no later than 21 days before it goes into effect.
What immediate changes should filers expect this tax season under the new law?
That would give the consumer some time to cancel their service or potentially switch to another cable provider. The idea behind the law is to put an end to often unexpected price hikes that come when promotional offers end. And the government has figured out that the average American adult works 28 hours per week, spends about 60 hours per week sleeping, and 18 hours watching TV. And they don't know that data because of spying or hacking into our phones. They know because they asked. The Labor Department's American Time Use Survey measures the amount of time people spend doing various activities, such as paid work, child care, volunteering, and socializing. But 1,000 diaries are routinely sent out to random citizens asking what they do in one day.
Turns out people in the Midwest work 20 minutes longer each week The Northeasterners and those in the West work about an hour per week less than Midwesterners. And in the South, people watch the most TV, one and a half hours per week more than Westerners who watch the least amount of TV of any region in the country.
Do you feel that? That's the long arm of the new tax law that's changing up numbers in people's tax returns as it takes effect. Wall Street Journal tax reporter Laura Saunders is here with key things to know about the tax law, including an e-book from the Wall Street Journal that puts everything in simple terms. So, Laura, we'll get to the e-book in just a moment, but we've been hearing about the tax law seemingly for a few years, and now it's impacting tax returns.
That's exactly right. The most provisions of the biggest overhaul in three decades, they were passed in December of 2017, but they took effect January 1st, 2018. And now people are filing their first returns under the new law.
And probably the biggest impact we've seen so far this tax season is lower refunds in many cases. It's confused and angered some people. They're posting on social media. It's even angered some politicians. But you say don't confuse a lower refund with higher taxes.
The Treasury officials decided last year that they wanted to put the tax cuts from the law because 65% of filers got tax cuts. They wanted to get that money back into the economy and circulating, so they changed, automatically changed withholding. That's paycheck withholding, pension withholding, the money you have taken out weekly. And they moved it down, and the result, it was not always a precise change that they made. They just changed it for everybody. So the result is that some people are seeing lower refunds than they expected, or even they owe a balance due because they didn't check their withholding last year.
And the money they might have gotten as a refund or a portion of it, they actually got back through the paychecks throughout the year?
That's exactly right. But sometimes people don't notice an extra $20 or $30 per paycheck, but they notice when there's $1,000 missing from the refund at the end of the year.
Yeah, yeah, exactly. There are many taxpayers that are worried about the new $10,000 write-offs for state and local taxes, but that worry might be unnecessary.
Right.
Well, it is for many people. Many people who live in high-tax states who were making between $200,000 and $500,000 in prior years won't have too much trouble with the limit on state and local tax deductions.
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