Trusted local news leader for Prescott area communities since 1882
Mon, July 22

Letter: Tax lesson


Enter tax season and the misinformation campaign has begun. First up, Kamala Harris, who implied there was a direct relationship between tax refunds and tax liability. One of two things: either Sen. Harris is ignorant of our tax system or she intentionally gave out false information. Refund amounts have nothing to do with tax liability; they, however, have a direct relationship with your W4 (impound account). The amount you have withheld from your paycheck or retirement.

So let me explain the relationship of tax refund and your tax impound account (W4). I will give this advice free to Sen. Harris. If you want a refund you understate your dependents on your W4; if you take more dependents than you deserve you probably will owe. The ideal situation is to take the proper amount of dependents, a direct relationship. Now what about the relationship between tax liability, the amount the IRS states you should pay and effective tax rate? This will determine if you got a tax cut. Take your AGI and divide it into you tax liability. This will give you the percentage of taxes based on income. Compare it to last year’s percentage but also be aware of your income. If this year’s is lower by comparison you got a tax cut. Your tax person should do this for you.

By the way, we got a tax cut, 1 full percent lower on higher income, and we are not in the 1 percent. Not even close.

Michael Oskins



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