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LI crawling like a turtle toward the finish line of a very taxing season

Monday is Tax Day. This April 15 is notable, though, because it caps the first year of the Tax Cuts and Jobs Act, the new tax law.

John Mansfield of Sayville owes the IRS $4,000

John Mansfield of Sayville owes the IRS $4,000 and he isn't happy about it. Photo Credit: Newsday / Steve Pfost

John Mansfield wishes he had studied up on the new tax law. Maybe if he had, he wouldn't owe the IRS $4,000. 

Mansfield, a science teacher in Lindenhurst, grudgingly put his check in the mail Thursday — three weeks after his tax preparer delivered the bad news. He purposefully dragged his feet.

"If they're going to make me pay, they're going to wait," he said.

Monday is Tax Day, the deadline for filing tax returns. This April 15, though, will be notable because it caps the first year of the 2017 Tax Cuts and Jobs Act, the first major revamp of the federal tax code in more than three decades.

Because of the new law, this tax season has been a confounding one filled with anxiety — for both taxpayers and tax preparers.

The overhaul reduced tax rates across the board and doubled the standard deduction for both individuals and couples, and the child tax credit. But it eliminated or capped a host of time-honored personal exemptions: unreimbursed employee expenses, home equity loan interest, moving expenses, alimony, tax extenders and, especially for New Yorkers, the state and local income and property taxes, or SALT.

Preparers had to familiarize themselves with different rates and deductions, and filers had to come to grips with what those different rates and deductions meant.

In a number of cases, Long Islanders heard numbers that they didn't want to — like the Mansfields. They went from being in the black to seeing red. 

"I wish I could send them bags of pennies," Mansfield said of how he wants to settle his debt with the Treasury Department.

Things haven't gone so great for the IRS either, numbers show. 

The filing season got off to a slow start because of the 35-day government shutdown. Then, taxpayers decided they were in no rush to file their returns, especially the ones who owed, preparers said.

Returns filed as of Friday stood at 103.5 million, down from 103.8 million from the same point in last year's filing season. The dillydallying was so bad through March that the IRS is bracing for a record-setting 14.6 million requests for filing extensions.

The numbers for refunds are running behind, too. About 77.9 million taxpayers are getting money back, compared with 79.1 million by this time last year.

Besides millions fewer getting refunds, the refunds are smaller, the IRS said. 

The refund total stands at $220.8 billion, a drop of nearly $6 billion from 2018; the average amount is $2,833, off roughly $30.

Gerald Meyer and his wife, Lindsay, are getting a smaller refund than they did last year — $1,322 vs. $3,489 — but they're not complaining because they paid $1,414 less in taxes overall.

"I really can't complain," said Meyer, 56, a retired state police officer who lives in Setauket. "We're doing OK."

Tough times

For the past few weeks, Islanders have been pouring into the offices of tax preparers.

Granted, tax time is always busy, but this year is different: It's upsetting. 

In seasons past, filers had a comfort level with the tax code that they didn't have this go-round. A good many wanted face time to hear exactly how the changes apply to them, the experts said.

"More people are coming in to sit down, and it takes a lot of explaining," said Anthony Basile, a certified public accountant who teaches at Hofstra University. "Plain and simple, with the new law, each return is taking longer, to apply the law, to explain the law. It's taking longer."

Alex Resnick has been pulling 90-hour weeks at his accounting practice in Woodbury so all his clients meet the Monday deadline, even if they are only filing for an extension. 

Appointments are running longer. And there are more stragglers, which Resnick attributes to pure dread. The latecomers often have heard the horror stories of their friends and relatives who either saw their refunds shrink or had to pony up.

"They're fearing bad news," said Resnick, who also heads the Nassau County chapter of the New York State Society of Certified Public Accountants.

For Martin Cantor, this tax season ranks right up there as one of the most stressful in his 36 years as a CPA.

First, Cantor had to learn the new tax code and the new computer programs he uses to do his calculations. The first few returns felt like they took forever because he had to stop so often to check a new regulation.

But what was really nerve-racking was delivering the bad news: “I had to tell clients that they owe money,” he said. “And nobody wants to hear that.”

One conversation was particularly troubling.

Cantor had to tell a couple that they owed the IRS and the state some $10,000 combined. 

They didn't take the news well. “That’s not chump change,” Cantor said. 

As if it couldn't get worse, he said, the couple had to take out a line of equity on their home to pay the bill.

They learned a hard lesson, just like a lot of other taxpayers: Pay attention, ask questions, take action.

The wife even put Cantor on the phone with her human resource department so she could adjust her withholdings. 

And Cantor saw the same thing with other clients. The shock made them more aware, really wanting to understand the ins and outs of their returns. 

"Now they know what the tax code means to them," he said. "They're taking more responsibility for their taxes."

Three tales

Despite all the hand-wringing over smaller refunds and bigger bills, about 80 percent of filers paid less in federal taxes in 2018, according to the nonpartisan Tax Policy Center.

Taxpayers, for example, earning less than $25,000 a year got a $60 break on average; the average reduction was about $900 for workers who earned from $49,000 to $86,000, figures from the center show.

Mansfield, the science teacher, didn't pay much attention to the extra $50 that started showing up in his paycheck twice a month. He thinks somebody — his accountant or even his employer — should have given him a heads-up.

In the end, though, he knows there is nobody to blame but himself.

“The buck stops with me," he said. "It’s my finances.”

Mansfield, 51, makes about $120,000 a year. His wife, Christin, earns about $110,000 teaching family and consumer science at the Lindenhurst middle and high schools. The couple lives in Sayville. 

They lost some $21,000 in deductions, in part because of the new $10,000 SALT cap. Their real estate taxes alone run $14,000.

 Until this year, the Mansfields received a refund. One was a hefty $3,000. And they counted on the money to go on vacation. 

They are still going on vacation this summer, but their trip out West won't be as grand. Instead of visiting seven national parks in two weeks, they will hit two or three  parks in a week.

And they are upping their withholding amounts so they don't get caught flat-footed again.

"I hate giving the government an interest-free line of credit," Mansfield said.

The Castillo household in Carle Place — Amanda, Jose and their two girls, Alexis and Daniella — can totally relate to the Mansfields, on deductions and vacation.

Amanda is a high school guidance counselor in Queens and Jose is the women's soccer coach at York College. Together, they earn $150,000.

The Castillos tried to contain the financial fallout from the new law by increasing their withholding amounts.

But they didn't take out enough to make up the difference in the deductions they lost. The deductions for her union dues and the interest on their line of home equity credit went away. And they took a hit on SALT, too. 

So, the family's usual refund of $5,000 plummeted to $360 — and the week at Disney has turned into a weekend at a water park. 

Breaking the news to Alexis, who is 8, and 6-year-old Daniella wasn't easy.

"They were very upset," Amanda said.

William Van Sickle's outcome is the exact opposite of the Mansfields and the Castillos.

The retired Navy lieutenant commander, 86, and wife Rebecca saw their refund increase by about $500 to $8,980.

For the Brentwood couple, the doubling of the standard deduction, from $12,000 to $24,000, was a boon. And they definitely paid less taxes for the year, he said.

"The refund, I like to get it," he said. "In my case, it worked out."

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