New laws affecting this year’s tax returns

A Liberty Tax Service sign waver stands on the corner of Sam Houston Blvd and Stenger Street in San Benito. (Maricela Rodriguez | Valley Morning Star)

HARLINGEN — You call this a refund?

A lot of people may be asking this question as the effects of new tax laws show up in individual refunds.

But one of the reasons for lower refunds this season is the federal government took less tax dollars from paychecks during 2018, said Karen Martinez, area manager of Liberty Tax Service.

Workers liked the bigger paychecks, but they may not have realized what was coming when it came time to file.

“They didn’t anticipate their refunds getting a little bit smaller,” Martinez said. “It’s impacting single people more than anything because they rely on those federal withholdings.”

Another change this year is in the standard deduction, which increased from $6,000 to $12,000.

This means people get to reduce their taxable income through deductions as property taxes and mortgages if those expenses total more than $12,000.

Before the changes in the tax law, they could get reductions in their total taxable income for expenses totaling over $6,000, Martinez said.

“Another thing that impacted people with smaller refunds is they can no longer take non-reimbursable employee expenses,” she said. “Every year they used to do it with the (Form) 2106. Some people know it as the long form.”

Form 2106 is for employee business expenses.

Previously, people would itemize job-related expenses for which their employer did not provide a per diem. Truck drivers could get reimbursed for meals on the road, and teachers who purchased school supplies with their own money could reduce their taxable income by having those expenses, thus providing a higher refund.

“This year, with the new law changes, they took that away,” she said.

They can still get reimbursed for property taxes and medical expenses, but most of those won’t amount to $12,000. So many people will get no tax benefit for those expenses.

“They’re seeing their refunds very, very low right now or even owing back,” she said. “In prior years they were used to getting maybe $1,000 back, and this year they might be owing $5,000. It’s pretty intense. People were just unaware of it.”

Also, tax season has been a little slower because of the government shutdown.

“A lot of people thought they weren’t going to get their refunds,” Martinez said. “A lot of employers released their W2s late. Employers took a little longer this year. But IRS is releasing refunds.”

Locally, people aren’t feeling the crunch as much.

“We still have people getting their $5,000, $10,000 refund checks because they have kids,” she said.

Many locals haven’t been thrilled about the changes.

“The new tax law should be revised to include a fair and equitable amount on all the individuals to be able to contribute,” said Domingo Navarro, 69.

“At the same time, we should not be having a tax that’s only going to benefit a certain amount of people with higher income. The middle class is not getting the benefit of a decent income tax return.”