Kinda figured this might have already come up in recent discussion, but I searched for every conceivable term and nothing showed...so I'll be the first then to confirm the rumors you may have already heard.

I just finished our taxes for 2018, and the $24K standard deduction formula was absolutely brutal for us. We usually get around $4500 back, and this year we will be paying $1744, making '18 the first year in I can't-remember-how-long (possibly ever) that we owe. Property taxes, mortgage interest, investment advisor fees, charitable contributions, etc. etc....all of it, it's all moot if you don't have total deductions in excess of $24K. We were close at around $23K, but not quite there; interestingly, I added a couple more thousand to our deductions to push us past $24K, and we still owed, so there's something else going on as well that doesn't work well at all for our upper middle-class household.

Obviously, it'll vary from return to return, but in general the rumors that the new tax law can be a really nasty surprise for some is true. For those who typically need to do some shuffling of funds to effect payment, you may not want to wait until the last second...just in case.

quote:

Originally posted by at-home-daddy:
Kinda figured this might have already come up in recent discussion, but I searched for every conceivable term and nothing showed...

5 page thread on it that I found with the ingenious search term of "taxes"

As far as your premise:

return or payment amount is a hairbrained standard for tax rates. The number that matters is your effective tax rate (total federal tax divided by total income).

they also changed the witholding formula so they weren't witholding as much money all year long from your paycheck.

---

Ego is the anesthesia that deadens the pain of stupidity

DISCLAIMER: These are the author's own personal views and do not represent the views of the author's employer.

There was a little less taken from each check too. I’d rather pay the .gov their money than get my overpayment back...it’s my money I lent them for a part of a year, interest free.
I’d advise considering lowering your withholding claimed by one to maybe come out closer to even next year. My taxes were significantly less this tax year than last, even though I made more money and had less withheld. I also got more back, even using the standard deduction.

Yes, a new W4 has been submitted.

Everyone talks about refunds compared to last year. It about what you pay in taxes that matters. Doesn't matter if you pay it during the year or at tax time.

Did you pay more or less in taxes this year?

Did your income change?

Do you have high property taxes?

The $10,000 limit is hitting a lot of people in high property tax areas.

I'd be way more pissed about getting a refund than owing, as long as what I owed was low enough to not incur a penalty. Why does anyone want to give the gov't. a free loan? I don't get that.

quote:

Originally posted by MooneyP226:
There was a little less taken from each check too. I’d rather pay the .gov their money than get my overpayment back...it’s my money I lent them for a part of a year, interest free.

Agreed - I never want to expect a refund and would rather pay at the end of the year that get.

quote:

Originally posted by PASig:
Do you have high property taxes?

The $10,000 limit is hitting a lot of people in high property tax areas.

Yes, outrageous state extortion is no longer federally tax deductible.

quote:

Originally posted by comet24:
Everyone talks about refunds compared to last year. It about what you pay in taxes that matters. Doesn't matter if you pay it during the year or at tax time.

Did you pay more or less in taxes this year?

Did your income change?

I totally understand this point.

But...

A lot of people won’t/don’t/can’t understand this.
Think of all those people on the back side of the bell curve. All they’re thinking about is “I got X ammount last year, I should be getting X+ this year!”
Then the head scratch, then the “this is bullshit” and point the finger...

owing the feds is a whole lot better than expecting a refund - that means you didn't have the use of your hard earned money for the whole year

me, I'd personally rather write a check for $500 than get a $5000 refund

quote:

Originally posted by tatortodd:

quote:

Originally posted by at-home-daddy:
Kinda figured this might have already come up in recent discussion, but I searched for every conceivable term and nothing showed...

5 page thread on it that I found with the ingenious search term of "taxes"

I just now did a(nother) search for "taxes" and get one thread for The Lounge, and four when I expand it to the site...and none of them are the thread you post. No idea why, but it wasn't for lack of trying that ingenious term. Thanks for finding it...I'll definitely give it a read, and apologize to Para, et al for resurrecting the topic.

quote:

As far as your premise:

return or payment amount is a hairbrained standard for tax rates. The number that matters is your effective tax rate (total federal tax divided by total income).

Effective tax rate is close...last year was just shy of 14%, this year it is just shy of 16%. So I suppose at those rates I can't complain too vociferously. But that doesn't account for the startling difference.

quote:

they also changed the witholding formula so they weren't witholding as much money all year long from your paycheck.

Thank you, I did forget about that.

quote:

Did you pay more or less in taxes this year?

Did your income change?

We paid more in taxes, and our income was more. I'd have to do the math to see if the percentages made it a bit of a wash as compared to last year, but both went up so not sure how much impact those had...I'd estimate some but not significant.

I note that allowable deductions w/ the $24K Standard Deduction combined w/ the disallowed previous Personal Deductions put deductions around 50% of last year...now *that* has an impact.

quote:

Do you have high property taxes?

The $10,000 limit is hitting a lot of people in high property tax areas.

Yes, King County of Washington State...not sure where we rank, but I'm sure it's toward the top of any list of high property-tax areas, unfortunately. But that too hasn't changed...it's always been high, especially of late.

I don't pretend to be familiar enough with tax formulas to know which components of the new tax law are responsible for this dramatic difference in my return -- withholding less throughout the year may be some, the vast difference is allowable deductions is certainly in play -- but whatever the recipe is, I don't like it.

Put $6000 into a 2018 dated Roth IRA... BAM, you no longer owe taxes.

Winning.

This is one of those areas that I feel that our collective opinion and behavior doesn't fit with a large portion of the population. There are many millions of people who count on getting a refund at tax time, and that in turn has an economic impact. One example is car sales. Down payment availability as a result of tax refunds account for a significant portion of spring time auto sales. Fewer or smaller refunds means reduced car sales.

It should not be a surprise that people like this may not be particularly sophisticated when it comes to taxes. They are also probably more likely to be unaware of any changes to the tax code because they fall into the low info demographic. They are possibly also equally likely to write off any small increase in their take home as a happy accident. To these people, it will come as a bitter shock. I expect they will make noise, and the media will use it as one more excuse to hammer Trump. What, if anything, really happens as a result, will be interesting.

quote:

Originally posted by at-home-daddy:

quote:

Originally posted by tatortodd:

quote:

Originally posted by at-home-daddy:
Kinda figured this might have already come up in recent discussion, but I searched for every conceivable term and nothing showed...

5 page thread on it that I found with the ingenious search term of "taxes"

I just now did a(nother) search for "taxes" and get one thread for The Lounge, and four when I expand it to the site...and none of them are the thread you post. No idea why, but it wasn't for lack of trying that ingenious term. Thanks for finding it...I'll definitely give it a read, and apologize to Para, et al for resurrecting the topic.

Use advanced search and switch to Order By Date (Relevance is default). It's an oddity of the search feature that will increase found threads by orders of magnitude.

quote:

Originally posted by bubbatime:
Put $6000 into a 2018 dated Roth IRA... BAM, you no longer owe taxes.

Winning.

Thanks -- yes, I checked into that...we've each set up both a Roth and Traditional IRA in the past so are available, but because of income restrictions, neither will work as desired in this case.

My effective tax rate according to turbo tax is 1.4% less this year compared to last year.

The child tax credit helped. I am pretty happy.

Thank You Mr. Trump

So I pay in more this year. I get my money and spend it next year. Not unlike 2 weeks withholding of paychecks, you earn it now, you spend it later.

I really don't see the whole of people jumping up and down yammering about the government with an interest free loan and whatnot the same way as many others.

The "interest" people might earn is (mostly) insignificant, and more likely to be dribbled away all year long and matter not in the quality of life or paying dividends.

Now, if it were withheld until you retired or died, I could understand the angst, but it is simply "moved forward" and you get back all you paid in, and the amount can be considerable as a "bigger hammer" that you can swing as you see fit.

I have worked and paid taxes for 50 years, and the few times I had to pay to "catch up", was more "painful" than anytime I have gotten my money back at the end of the year. (self employment/running a business really sux in the tax world)


I understand he POVs, and will not call anyone foolish, stupid or otherwise denigrate them. It is each person's money and choice.

Daddy,

What was your total tax liability for the 2018 tax year vs 2017. This number is the total tax you have to pay before your withholding is applied. That's the really important number.

I paid $4k less in taxes this year than last year. Thanks Trump.

quote:

Originally posted by gw3971:
I paid $4k less in taxes this year than last year. Thanks Trump.

Not us. The $10k max State and Local deduction took us to the cleaners. That said, we had a nice bump in income on a one time deal that brought on the added tax too. We’ll have to wait for next year to see where our taxes level out.