Tax season is here, and tens of millions of Americans are finding an unpleasant surprise when they enter the final calculations on their return.
Tax returns being filed in 2019 are the first under the tax reform bill passed in 2017, and more than a dozen deductions working Americans relied on for decades are gone. Changes to the withholding rules mean that many people expecting a refund check from the IRS are finding that they are the ones on the hook.
“People got used to their taxes being a certain way,” said Political and Legislative Director Austin Keyser. “It isn’t that way anymore and a lot of people are getting hit with some terrible news.”
The last time a major tax reform bill was passed was 1986, so entire generations of working people have grown to expect consistency when tax time rolls around each April.
When Republicans pushed through the most recent changes, most of the attention went to the hundreds of billions of dollars that corporations and the billionaires behind them would save, and the eliminated deductions for working families might have slipped by unnoticed.
Grand Rapids, Mich., Local 876 Business Manager Chad Clark was so concerned about the possibility of much higher taxes for his members that he joined a handful of business managers in sending a warning letter to his members in January.
“Due to the recent tax reform (effective January 1, 2018) many miscellaneous itemized deductions that you have claimed in the past are no longer deductible,” he wrote.
The list of no-longer deductible items was fairly long:
- Union dues;
- Tools and supplies used for work;
- Work clothes and uniforms, if required and not suitable for everyday use;
- Work-related travel, transportation and meal expenses;
- Depreciation on a computer or mobile phone that your employer requires you to use in your work;
- Work-related education;
- Home office expenses for part of your home used regularly and exclusively in your work;
- Expenses of looking for a new job in your present occupation, including travel;
- Legal fees related to work;
- Subscriptions to trade journals or magazines;
- Business liability insurance premiums; and
- Dues to professional societies.
The letter was similar to some he had seen other business managers send out.
“A lot have called back and said, ‘Gosh you were right,’” Clark said. “One individual said it was a $7,000 difference. People need to understand this.”
The IRS last month was already reporting, after just the second week of filing season, that the average refund was down nearly 9 percent and the number of refunds of any amount was down 16 percent.
Everyone’s situation is different, Clark said, and he was at pains to remind his membership that they shouldn’t rely on anyone’s general advice over a tax expert.
“This was just for information, to let them know not to expect to take this stuff off,” he said.
International President Lonnie R. Stephenson wants to go a step further and fix the problem at its source.
Back in November, Stephenson sent a letter to every member of the U.S. House, asking them to co-sponsor a bill introduced by Pennsylvania Rep. Conor Lamb called the Tax Fairness for Workers Act.
The bill would reinstate the tax deduction for union dues and unreimbursed employee expenses, returning nearly $20 billion to working families, according to an AFL-CIO study.
Even better, the bill would allow workers to make the deductions even if they don’t itemize their returns.
“These important tax provisions were key features of the federal tax code for decades and helped sustain not only IBEW members, but all of our nation’s middle class,” Stephenson wrote. “Congress should reinstate them and allow working American households to keep more of their hard-earned money.”