Milky Way Candy Bars, Tissues and the Tax Season
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What quick money and market headlines set the stage for this episode?
With your money briefing, I'm J.R. Whalen at The Wall Street Journal in New York. Tax preparers are turning to chocolate and tissues for crying when they get ready to deliver the bad news about lower tax refunds to their clients. The journal's tax reporter, Laura Saunders, will have the story in a moment. First, these money and market stories you should know. A new report from Zillow analyzed how much money people have left over after paying their mortgage each month. The winners? Homeowners in Washington, D.C., who have about $7,000 of their monthly income left over after making housing payments. At the bottom of the list, Los Angeles residents only have about $3,400 left over per month. Miami, Tampa, and Orlando, Florida also rank low on the list.
The national average, by the way, is $4,300 per month after paying their mortgage. Economic data that acts as a barometer for the nation's restaurants, builders, bankers and other service providers is pointing up. The U.S. service sector expanded in February after pulling back in December and January. The report showed companies were seeing stronger new orders in February compared with the prior month. But the measure of employment growth remained positive, but it cooled last month. That's mainly because a historically small share of Americans are out of work and looking for a job. Also, companies frequently must poach workers from competitors, and that slows their ability to expand the workforce.
And do you know how your salary stacks up against other people in your field or across other sectors? For the second year, and to be in compliance with 2010's Dodd-Frank Act, most publicly traded U.S. companies are disclosing how much a typical employee makes. The Wall Street Journal has published an interactive tool that shows you the median salary in sectors such as energy, tech, finance, and health care, as well as at companies in those sectors. And companies must include part-time, temporary, and seasonal workers in the tally.
Which U.S. cities have the most and least monthly leftover income after mortgage payments?
but they don't have to account for independent contractors if they don't set their pay. Check it out and run the numbers at WSJ.com.
What do candy and a box of tissues have to do with the tax season, and this tax season in particular? Will tax preparers offer them to their clients to soften the news of lower refunds or taxes they have to pay? And Wall Street Journal tax reporter Laura Saunders is here to explain. So Laura, taxpayers and tax preparers alike have known for some time how the new tax law has changed up withholding, and put a cap on some deductions, that doesn't lessen the sting when the tax preparer runs the numbers and has to deliver some bad news.
Well, that's exactly right. We wrote about this all last year. The Treasury Department thought it would be a good idea to deliver the tax cut, because most people are getting tax cuts, deliver it early through paychecks. And they automatically changed withholding, and people got a little bump. And they didn't pay too much to that bump. But they're paying a lot of attention now when they're finding out that their refund that they were counting on has turned into a bill that's due or a much lower refund. In some cases, the swing could be from a $5,000 refund to a $9,000 tax bill. That's a lot to cope with.
It is. And you made a good point in your story talking about behavioral economics and such and that a refund as opposed to money paid out across 26 paychecks could be around the same amount, but it feels different.
Yes, it feels very different. And we quote a professor who does work on this at the University of Chicago. He worked on rebates and bonuses or something and how people spend them. They save one and they spend the other. And the same thing is true. They saw people saw a little bump in their paychecks and they maybe they thought it was a cost of living adjustment or something. But now when that refund is not there, they're really upset because many people were accounting on it to pay down student debt or finance a wedding or whatever.
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Chapters
4 chapters
1
What quick money and market headlines set the stage for this episode?
0:05–1:58
2
Which U.S. cities have the most and least monthly leftover income after mortgage payments?
1:58–4:19
3
What do recent service-sector indicators reveal about the U.S. economy in February?
4:19–7:14
4
How can employees compare their pay using newly disclosed company median salaries?
7:14–7:27
Speakers
2 identifiedMore from WSJ Your Money Briefing
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