Is the title a true statement? If nothing changes on my end the tax law changes should result in a lower tax liability for 2018, right?

It won’t magically double or anything?

We'd have to know a whole lot about your tax situation to be able to help with that question. If you use a tax advisor, see if their software can 'rerun' the return under the 2018 rules.

Understand that many of the changes are unclear. So if you are in a partnership or S Corp, it may or may not be clear whether you get the special 20% deduction on business income...... a long way of saying even if the software can make a computation the result might not be accurate.

If you're like me and income is from a W-2 and you have a basic set of itemized deductions, your tax advisor may be able to give you an answer.

standard deduction for married filing joinly is 24K now. If you itemized last year and your deductions were around 24k it would stay relatively close. There are a lot of factors that make up "income" though.

Tax rates are lower. Standard deduction is double. But personal and child deductions are gone. But income limit for child tax credit was raised to 200K from 55K. It also doubled to 2K. These are the factors affecting most regularly employed people.

Also “owing less” depends on your withholding. Your total tax burden should be less. But if you had less taken out in your paychecks then what you owe in April could be more. What you owe or get back in April has nothing to do with your tax rate really. It’s how much you overpaid or underpaid during the tax year.

What do you mean by "personal and child deductions"?

quote:

Originally posted by kx90:
What do you mean by "personal and child deductions"?

No deduction for "personal exemptions" - i.e. you, spouse, children, any other dependents.

But, you still have to be concerned about them meeting the dependency tests because those definitions still exist when it comes to different deductions and credits even though the "personal and dependent exemption" amount is out the window.

As said earlier, way to many variables in each persons situation to attempt to generalize - best way to determine is to run a projection based on either 2017 recast with 2018 rules or best estimates of 2018 income and deduction items. The more they simplify it, the more we have to do!

And, don't believe the bs about them simplifying the 1040. They dropped some lines off it and added schedules to replace a lot of the data that they removed. Yes, for some that 1040 will be simpler but for LOTS of others, it's going to mean MORE forms!

So if I understand correctly, "deductions" isn't the same as "credit"?

The "child tax credit" that is $1k?

quote:

Originally posted by kx90:


The "child tax credit" that is $1k?

it's now $2,000 per child.

It's my understanding from what I'm reading and hearing that people's tax refunds may be lower than before, so if you are someone who counts on a huge refund, you may not be seeing that going forward.

I don't count on my refund but I don't try and skirt the line as close as possible either. My Fed WH's were set at 4 or 5. I'm single and I file HH and claim one child. Normally I would get around $2,500 back.

My son turned 17 this past April, so does that mean I no longer get the tax credit for him?

quote:

Is the title a true statement? If nothing changes on my end the tax law changes should result in a lower tax liability for 2018, right?

Yes, if you are self employed. Yes, for most of you that are a W2 employee, all else being the same. But, W2 employees are being under withheld per IRS tables in 2018, so expect a smaller refund. All by design to make Trump/Republicans look bad?

I haven't looked into it too deeply but I've been told that we will no longer be able to deduct non-reimbursed business expenses. I'm afraid to go back to the '17 returns to see what impact that's going to have.

Not enough information

it depends on your specific situation with everything else that might be in play

not a one-sized all situation

Ok, so let me give a few more details. Married, 3 kids. Same as last year. All income from a single W2, same as last year. Will make slightly more this year, about 12%, but I will be in the 22% bracket.

After deductions on my “taxable income” I owed about $3600. That was largely offset by the child tax credit.

What I’m trying to decide is how much to reduce my withholding for the remainder of the year from no reduction at all to possibly claiming exempt. I have already withheld $4100 this year. Given what I owed last year, currently withheld funds plus the $6000 child tax credits means I’m probably ok.

So I’m considering drastically reducing witholdibgs.

So according to the IRS.gov witholding calculator I should get $50 back this year and I should set my WH's to 6...

CA- There's a limit on your property tax deductions.

quote:

Originally posted by kx90:
I don't count on my refund but I don't try and skirt the line as close as possible either. My Fed WH's were set at 4 or 5. I'm single and I file HH and claim one child. Normally I would get around $2,500 back.

My son turned 17 this past April, so does that mean I no longer get the tax credit for him?

Unfortunately, since I'm a small business owner, my payroll witholdings have been zero for decades thanks to owning a sub S corp. I would love to get some money back but unfortunately I have to pay quarterly estimated taxes on top of our w/h...

It's not that simple, but there are lots of tools out there to help you run an estimate, including one from Turbotax I believe.

The biggest sleeper impact is the loss of deduction over $10K combined for state income taxes plus property taxes. For folks with significantly more than that the lower tax rates may not offset that loss of deduction.

For the people who don't itemize, it is far easier to estimate!

quote:

Originally posted by kx90:
So if I understand correctly, "deductions" isn't the same as "credit"?

The "child tax credit" that is $1k?

huge difference

deductions - if you qualify - reduce your income

credits reduce the actual tax owed dollar for dollar

credits are MUCH better at reducing your taxes owed.

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quote:

Originally posted by Georgeair:
It's not that simple, but there are lots of tools out there to help you run an estimate, including one from Turbotax I believe.

The biggest sleeper impact is the loss of deduction over $10K combined for state income taxes plus property taxes. For folks with significantly more than that the lower tax rates may not offset that loss of deduction.

For the people who don't itemize, it is far easier to estimate!

Last year we itemized 20k. I don’t foresee a significant increase that would get us to 24k in itemized deductions...