quote:

Originally posted by at-home-daddy:

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.

People are only surprised if they don't understand numbers. I'm just stating a fact and not trying to bust your balls but you don't understand numbers.

Here are the facts:
Fact 1:
Tax rates were reduced across the board. If you're filing as Married Joint or a Widower:
The portion of your income between $18,650 to 19,050 is now taxed at 0% reduced from 12%.
The portion of your income between $19,050 to $77,400 is now taxed at 12% reduced from 15%.
The portion of your income between $77,400 to $165,000 is now taxed at 22% reduced from 25%
The portion of your income between $165,000 to $233,350 is now taxed at 22$ reduced from 28%.
The portion of your income between $233,350 to $315,000 is now taxed at 24% reduced from 33%.
If tax rates were reduced across the board, the tax liability for the same amount of income is going to be less in 2018 than it was for 2017.

Fact 2:
The standard deduction for Married Joint return in 2017 was $12,700. For 208, it is $24,000. If your itemized deductions is less than $24,000 then you are getting a BIGGER deduction in 2018 than in 2017. For example, if your itemized deductions is $23,000 then in 2017, you reduced your taxable income by 23,000. But in 2018, you reduced your taxable income by $24,000. Your taxable income for 2018 is now less and is subject to even lower rates.

Those two facts tell you that life is better under Trump as far as income taxes go.

quote:

Originally posted by sigmonkey:
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.

What people don't consider when they do the whole "I'll give the .gov more of my money all year so they can give it back next year" approach is that they might NOT get that money back, or it may take months or years to get it back.

Every year thousands and thousands of fraudulent tax refunds are filed for. If you're a victim, it could be a long long time before you get your money.

And I don't trust our government, state or federal, enough to believe they won't one year say "Oopsie, we are going to retain all tax payments this year because we need the extra funding".

It's my money. Damned if I'm giving them any more than I have to. Additionally, it's not rocket science for the vast majority of people. The IRS withholding calculator will tell you where you are in just a minute or two. I can set up an automatic draft from my paycheck with my credit union if I want an extra chunk of my own money next year sometime.

quote:

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

Winning.

Roth is after tax, meaning it has no impact on deductibility. From the sounds of it, the person who posted this would not benefit from a regular IRA either, because there is a cutoff where you loose the deduction.

quote:

Originally posted by sigmonkey:
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.

Bingo, Monkey.

quote:

Originally posted by 280nosler:

quote:

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

Winning.

Roth is after tax, meaning it has no impact on deductibility. From the sounds of it, the person who posted this would not benefit from a regular IRA either, because there is a cutoff where you loose the deduction.

I've got my eye on a Traditional IRA, in the event my income is a smidge too high.

quote:

Originally posted by at-home-daddy:
I just finished our taxes for 2018, and the $24K standard deduction formula was absolutely brutal for us.

How did AMT affect your 2018 federal tax return vs. previous years?

quote:

Originally posted by Rey HRH:


People are only surprised if they don't understand numbers. I'm just stating a fact and not trying to bust your balls but you don't understand numbers.

Not going to get in a debate over my aptitude for numbers, but before one makes a claim about others, they should be careful they don’t have a myopic view that relies too much on base numbers and not overall context. For example:

quote:

Here are the facts:
Fact 1:
Tax rates were reduced across the board. . .
If tax rates were reduced across the board, the tax liability for the same amount of income is going to be less in 2018 than it was for 2017.

I am aware of that. However, in my case, my *effective* tax rate went up at 2%. Attractive base tax rates don’t tell the story in a complex return.

quote:

Fact 2:
The standard deduction for Married Joint return in 2017 was $12,700. For 208, it is $24,000. If your itemized deductions is less than $24,000 then you are getting a BIGGER deduction in 2018 than in 2017. For example, if your itemized deductions is $23,000 then in 2017, you reduced your taxable income by 23,000. But in 2018, you reduced your taxable income by $24,000. Your taxable income for 2018 is now less and is subject to even lower rates.

It’s important not to have tunnel vision on that $24K. A personal Married FJ deduction that was combined with itemized deductions has been replaced by a smaller standard deduction. If one’s itemized deductions are a dollar under $24k, they’ve lost $12,700 in deductions.

There were some issues outside the new tax structure that impacted our return (most notably the Child Tax Credit reduced to Other Dependent credit for our two 18+ children), but the new plan certainly didn’t help offset those issues in the way that someone just looking at attractive base rate reductions might believe.

I pay taxes 5 times a year


4 of those times I pay based on what my income was last year....so if, for example, my income was up in 2017, but down in 2018, I am paying taxes like I was earning in 2017, even though I have significantly less money because of issues in 2018 (this is actually what happened)

The beginning of the year is always fantastic because I have to pay first quarter taxes and yearly taxes within about a month of each other


And I got audited last year

I love the IRS

quote:

Originally posted by nhtagmember:
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

Me, I’d rather get a $5,000 refund. Of course, I’d immediately change my withholding to make sure I didn’t make the silly mistake of giving “Uncle” an interest free loan this year. My goal is always to owe as much as possible with finishing form 2210 with a penalty.

ETA: This is my choice, allowing me to invest, save, or spend my money as I see fit through the year and defer taxes as long as possible without penalty. If others choose to use an interest free loan to the government for whatever reason, that is their choice. If choosing between loaning it to Uncle at 0% and depositing in a bank at near 0%, there isn’t much incentive to take on the possible risk of bank failure (small, but so is the interest). If folks choose to “save with Uncle Sam” because they lack the disciple to save otherwise, it may be a smart choice for them.

My family and I got hit hard this year. We usually get back 3-4 thousand. This year we paid $318. The East and Weat coasts are getting hit hard due to high property, school and personal taxes. Liberal states jurt the pocket.

Rey HRH Great post. My deduction for 18 was greater than 17 therefore less tax. But my tax rate was 10% of taxable income. Did I make a mistake?

Saw a piece on the news that the IRS had released preliminary figures showing that overall returns are slightly up.
As Tatortodd noted the only number that really matters is your overall tax paid.
Again for most of us that number decreased last year. But that fact doesn't support the agenda that the mainstream media is promoting and the vast number of citizens are too lazy or too dense to actually compare their annual "taxes paid" numbers.
Those having their State portion driving any increase need to place the blame where it belongs, at the State and local levels. Hint, flyover country is sick and tired of subsidizing via the elevated values\property taxes .

quote:

Originally posted by Karpteach:
Liberal states jurt the pocket.

This is true, and one point of the Federal tax changes was to stop having residents in low and no tax states subsidize the residents in high tax states. Though it costs me personally, I firmly approve of this.

Unfortunately, those of us in high tax states are taking a bit of a beating. I can’t blame the federal government for that though as in essence they’ve been subsidizing poor fiscal policy in high tax states for years. In my own personal example, my wife and I were still able to itemize this year. Last year we had a bit over $42,000 in deductions. This year because of the state and local tax deduction cap at $10,000 we were only able to have about $28,000 in deductions. That is also with the addition of a child, that we have never had as a factor in our taxes before. I don’t have the numbers in front of me so I don’t know for sure, but I believe that our effective tax rate might have gone up very slightly. If you include our smaller return (half of last year) and couple it with the additional pay in our checks, we really end up about even. I’m honestly ok with that because the long term effects of the lower taxes will result in greater performance of our retirement investments so it’s a net positive. We also fully plan on moving from NY when we retire, so we should reap tremendous benefits on the back end.

No city or state income taxes here. We did quite well with the changes. MAGA!

The early report that the media jumped on and pumped was wrong.

They were pumping it because they wanted to smear Trump and republicans - nothing more. Now that more data is out, refunds are actually UP by 19%.

https://www.foxbusiness.com/pe...2018-levels-irs-says

Average tax refunds up 19%, now in line with 2018 levels, IRS says

The average tax Opens a New Window. refund, which had been lagging so far this tax season, is now in line with last year’s levels, according to data released Thursday by the Internal Revenue Service (IRS Opens a New Window. ).

Data from the week ending Feb. 22 showed the average refund was $3,143 – a 1.3 percent increase when compared with the same period last year ($3,103). It encompasses four weeks of tax season.

That represents a meaningful jump when compared with last week’s data, which had the average refund pegged at $2,640, down by double digits when compared with the year prior.

The Treasury Department attributed the sizable increase in average refund size to the remainder of the Earned Income Tax Credits and Child Tax Credits being paid out last week. It also cautioned that data is likely to fluctuate week to week, and it is therefore difficult to draw conclusions this early on in the filing season.

The overall amount the IRS has paid in refunds is now only down about 3.6 percent. The total number of refund checks doled out is down 4.8 percent.

So far this year more than 47 million returns have been processed, a decline of more than 4 percent when compared with the same period last year. More than 3 percent fewer returns have been received by the agency.

Throughout the early weeks of this year’s tax season, many payers voiced frustrations over smaller or non-existent refunds – with some even owing the agency for the first time.

On this note, the Treasury continued to emphasize that there is a difference between your tax liability and your tax refund.

“The size of someone’s refund is a separate issue from whether their taxes have increased or decreased,” the department noted in a statement on Thursday. “Most people are benefiting from the Tax Cuts and Jobs Act by receiving larger paychecks throughout the year, instead of tax refunds that simply result from people overpaying the government throughout the year.”

Overall, Treasury officials said they expect fewer Americans to get refunds this year when compared with last year. However, they said most Americans are still expected to see a net tax benefit as a result of the passage of the Tax Cuts and Jobs Act.

A spokesperson for the Treasury Department previously told FOX Business that individual taxes will be lower for “approximately 80 percent of filers” thanks to the Tax Cuts and Jobs Act. Meanwhile, another 15 percent of people will see no change. That leaves about 5 percent who will owe more.

quote:

Originally posted by pedropcola:
Geez dude you are mixing apples and oranges and complaining when smarter people are pointing out you are wrong. You are complaining that your effective tax rate went up 2% and later you acknowledged you made more money and now have less dependents as well. Well holy fuck dude, under the old rules your effective tax rate would have went up as well. Right? No, it must be the President’s fault.

I hate tax preparers but threads like this make me understand why they still exist.

Your math and your logic are jacked. You apparently have adult age children that you aren’t getting the child tax credit anymore and you are surprised your taxes went up. Wtf?

We made a bit more money, yes, but as stated earlier we also paid more taxes, and quite frankly the $3K difference in child credits ($4K down to $1K) for our two kids was a drop in the bucket, so neither account to any significant degree for the difference I experienced.

Several in this otherwise interesting thread have criticized my intelligence, my aptitude for numbers, and my logic, and suggested I’m blaming Trump...I think at this point I’ll largely bow out before my responses become less measured. My intention in posting originally was not to defend my intelligence or my support of Trump or the general worth of the new tax plan, but to simply give others a heads-up that they may not want to wait to do their returns as they may find that the outcome is not what they have typically seen; based on what I’ve read and heard from friends, my experience is certainly not unique.

quote:

Originally posted by at-home-daddy:

quote:

Originally posted by Rey HRH:

[QUOTE]Fact 2:
The standard deduction for Married Joint return in 2017 was $12,700. For 208, it is $24,000. If your itemized deductions is less than $24,000 then you are getting a BIGGER deduction in 2018 than in 2017. For example, if your itemized deductions is $23,000 then in 2017, you reduced your taxable income by 23,000. But in 2018, you reduced your taxable income by $24,000. Your taxable income for 2018 is now less and is subject to even lower rates.

It’s important not to have tunnel vision on that $24K. A personal Married FJ deduction that was combined with itemized deductions has been replaced by a smaller standard deduction. If one’s itemized deductions are a dollar under $24k, they’ve lost $12,700 in deductions.

That's not quite correct. Last year, one would have taken the standard deduction of $12,700 for MFJ if their itemized deductions did not exceed $12,700 OR the itemized deduction if it did. One did not take both (i.e. standard + itemized).

However, the personal exemption that one would have received on last year's form ($4,050 per dependent) is gone this year.

Therefore, if it was you and your wife using a standard deduction, your total would have been $12,700 standard deduction + $8,100 exemption for a total of $20,800 versus a $24,000 standard deduction this year, so you'd have been ahead by $3,200 on the taxable total this year.

If the two kids qualified as dependents last year, it would have been $12,700 SD + $16,200 exemption = $28,900 or $4,900 more in taxable income this year.

This may have been offset by increases in child tax credits or a small credit for non-child dependents and a reduction in tax rate on most (all?) tax brackets so it should result in a small reduction for most middle income earners not in high tax cities or states.

quote:

Originally posted by Karpteach:
The East and Weat coasts are getting hit hard due to high property, school and personal taxes.

It sucks for you, but why should the rest of the country have to subsidize the states that tax their residents to death?

We'll be doing our taxes in the next few weeks. I will note that back in Jan/Feb 2018 when they updated the withholding tables my take-home pay increased by $200 per month, and my wife's increased by $140 per month. There was a whole thread about the "Trump Bump". If we do wind up owing, I should have enough in savings to cover it. My property taxes are ~$2,600 per year, so the cap on the SALT deduction won't apply.