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Originally posted by StarTraveler:

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Originally posted by at-home-daddy:

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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 A personal Married FJ deduction that was combined with itemized deductions has been replaced by a smaller standard deduction.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

Thank you…I misspoke. Yes, I meant personal exemption, not deduction.

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Originally posted by at-home-daddy:
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 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.

Sorry if my post came across as accusatory - I was just addressing the initial media reports that came out about this. It was top headline news on all the media for several days. The current information that refunds are actually UP by 19% is not being reported or played up by the media that was trumpeting the early, erroneous report. It sucks you had to pay more this year.

TAXES, no one likes to pay them. I like my "refund", not much difference in giving the govt' a interest free loan versus a almost zero interest loan to the banksters. It is so heart warming when they take my savings and give it to the developers etc. and they get to make 'interest' off it and neglect to pass on any of the profit to me in exchange for the dollars I 'loaned' to them. Funny how my money is counted as their money on their P&L reports. TAXES the one sure thing besides a dirt nap!

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If the two kids qualified as dependents last year, it would have been $12,700 SD + $16,200 exemption

That's why my taxes are higher.

My baby graduated in May. She lived here through June. She started a new job (out of MO) after July 4th. So basically, she was a dependent for 6 months. IRS rules are 7 months. So she won't be a dependent for tax purposes.
.... and I'm OK with that!

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the possible risk of bank failure (small, but so is the interest).

Nearly all banks are FDIC insured up to $250,000 per account owner. It may take some months to recover your money should a bank fail, but you will recover it. There are many banks that are currently paying over 2.5% on regular savings and MM accounts. While you won't get rich putting money in such an account, it's still better than letting the government hold your money interest free.

All of that considered, I understand there are some people who simply can't save money, but if their take home pay is a little smaller they can somehow make it work. The reward being some cash in hand from a tax refund. I don't have a big issue with this plan if it's what works for the individual.

Getting back $2018. Paid $750 last year. Made more than last year. First time we have had a refund in many many years.

I cut a check for $4,000.00 last year. Cut a check this year for $2,500.00, plus my income went up significantly.

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Originally posted by Powers77:
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 .

I very intentionally did NOT state that the only number that matters is overall tax paid.

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Originally posted by tatortodd:
The number that matters is your effective tax rate (total federal tax divided by total income).

The reason is that not everyone's income is the same every year and neither are their deductions. I'm a great example of this as my effective tax rate was 16.14% for 2017 and 19.99% for 2018. The reasons were:

my taxes were incredibly complex 2014 to 2017 due to my expat assignment in Canada. For example, 2017 taxes were greatly reduced by foreign tax credit, but since my employer paid my foreign taxes I had to mail a pretty substantial check to my employer for the foreign tax credit.

I discontinued making charitable donations to a charity that I had supported for over 15 years. Back in the day, I used to know their CEO (e.g. been to his home in Rwanda twice. He was their manager of a 3 country region in Africa prior to becoming CEO) and had at least met a previous CEO, and they did great Christian ministry work in the 3rd world. I hadn't realized that as senior staff retired they changed from promoting missionaries up through the ranks to hiring accountants from Big 4 accounting firms, added a VP position for brand management (always a bad sign for a charity), and had begun bringing refugees to the US and getting big money from the 0bama admin for doing it. They had become addicted to living off the US Gov't teat, and when the Trump admin cut-off/decreased their refugee funding they started letters to donors requesting more donations and complaining about Trump. Fuck 'em, I cut them off too.

I think the new tax rates and reduced withholding are great, and I'm confident next year will be same as this year as my income has leveled and my deductions have leveled.

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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.

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quote:
Originally posted by tatortodd:
The number that matters is your effective tax rate (total federal tax divided by total income).

You didn't state whether this should use Gross Income or Taxable Income.

You and I both know the answer but that is a critical difference for folks who actually care enough to see what their true impact was.

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Originally posted by Georgeair:

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Originally posted by tatortodd:
The number that matters is your effective tax rate (total federal tax divided by total income).

You didn't state whether this should use Gross Income or Taxable Income.

You and I both know the answer but that is a critical difference for folks who actually care enough to see what their true impact was.

To get your effective tax rate, you’ll divide your total tax expense by your taxable income. They changed the 1040 form between 2017 and 2018:

For 2018, you’ll find your total tax paid on Line 15 on the new Form 1040 and taxable income on line 10 of the new tax form.

For 2017, you’ll find your total tax expense from line 63 and taxable income from line 43.

---

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.

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Originally posted by tatortodd:

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Originally posted by Georgeair:

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Originally posted by tatortodd:
The number that matters is your effective tax rate (total federal tax divided by total income).

You didn't state whether this should use Gross Income or Taxable Income.

You and I both know the answer but that is a critical difference for folks who actually care enough to see what their true impact was.

To get your effective tax rate, you’ll divide your total tax expense by your taxable income. They changed the 1040 form between 2017 and 2018:

For 2018, you’ll find your total tax paid on Line 15 on the new Form 1040 and taxable income on line 10 of the new tax form.

For 2017, you’ll find your total tax expense from line 63 and taxable income from line 43.

Not the answer I was expecting, though technically correct as to effective tax rate.

For the folks trying to really understand the simple question rather than the accounting one, I'd be looking at taxes as percent of gross income before deductions year over year.

This answers the question of "for each dollar I made how much did I have to pay?" better, agreed? And that's really what the point of all this is, right?

I only owe about 600 bucks this year with an additional exemption which I may or may not drop, not too shabby.

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For the folks trying to really understand the simple question rather than the accounting one, I'd be looking at taxes as percent of gross income before deductions year over year.

This answers the question of "for each dollar I made how much did I have to pay?" better, agreed? And that's really what the point of all this is, right?

Disagree as it neglects deductions which come out of your gross income.

This thread is essentially trying to answer the question "are the new tax laws good for me?" Gross income would ignore the changes in the law's deductions as well as self-directed changes (e.g. charity, before tax vs after tax investing). In other words, your method wouldn't fully gauge the effects of the law because it changed deductions as well as tax brackets. It's really easy to do it right and it tells you more.

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Originally posted by tatortodd:

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For the folks trying to really understand the simple question rather than the accounting one, I'd be looking at taxes as percent of gross income before deductions year over year.

This answers the question of "for each dollar I made how much did I have to pay?" better, agreed? And that's really what the point of all this is, right?

Disagree as it neglects deductions which come out of your gross income.

This thread is essentially trying to answer the question "are the new tax laws good for me?" Gross income would ignore the changes in the law's deductions as well as self-directed changes (e.g. charity, before tax vs after tax investing). In other words, your method wouldn't fully gauge the effects of the law because it changed deductions as well as tax brackets. It's really easy to do it right and it tells you more.

Respectfully, I disagree for these purposes.

If I made $1,000 and in year one had allowed deductions of $200 and the tax tables got me to tax of $160, your answer for that year is 20% effective rate (which, BTW, I agree with).

In year two I made $1000, my deductions through some miracle are $600 and the tax tables got me to a tax of tax of $80 your answer is again, an effective rate of 20%.

By your method of comparing "effective rate" based on taxable income I'm not better or worse off since both are the same %. Clearly I am better off and paying only 8% of gross in year two vs 16% in year one.

All of this is assuming that the expenses underlying the deductions is the same in both years, and only the rules of deduction changed. In the narrow band of 2017 vs 2018 for most people that's exactly what has happened. Not the reduction, but the income/expense are relatively flat, just the rules have changed...

I think the above is how people view the "how much of what I made did I get to keep" equation, not as a percentage of a taxable income amount that is changing through legislation with no change to amounts earned or paid.

quote:

Originally posted by tatortodd:
[QUOTE]Originally posted by Powers77:
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 .

I very intentionally did NOT state that the only number that matters is overall tax paid.[QUOTE]

Tatortodd,
Sorry if I confused your message. That was not the intention. Actually meant that one really needs to look at the true effective rate we pay vs. just focusing on what our "refund" or "payment" was. Think we are actually saying the same thing, you just said it better than I.

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Originally posted by RHINOWSO:

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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.

I don't get that. Everyone says it but I've never understood that thinking. My wife and I purposefully claim single, no dependents. That way we are assured to get a refund. I'd much rather get a refund than end up owing an unknown amount every year. I guess part of it is we are not disciplined enough to take that money each month and pay toward our debt. it seems like there is always something that would eat into that money. By getting a lump sum we take 90 percent of that and put it directly to debt. It works for us but I guess everyone is different.

Well, I am one of those guys who made fun of you. I will say that I would bet you a crisp 20 dollar bill that if you actually pulled your real numbers which means figuring out how much difference was withheld each month. Also, allowing for differences in earnings and number of dependents. Ie, if you actually compared apples to apples you paid less. I would take that bet with the majority of people who think the new tax rules hurt them and I would win FAR more often than I lose.

That being said I did find one weird abnormality in my state this year. Maryland. Go figure. They have a stipulation that if you itemize your federal taxes you can itemize your state return as well. If you take the federal standard though, which now almost everyone does, you have to take the standard MD deduction which under the new law they bumped up 500 dollars to a whopping 4500. Ouch.

We are moving once the last kid is out of HS next year. It will save us a small fortune. I suspect Blue states will have to adjust to the new reality or risk widespread taxpayer fleeings.

Gave my data to my CPA today. Fully expect to pay less taxes this year

I ran my 18 taxes on my 2017 version of TurbTax.

I paid $810 more in taxes in 2018 versus 2017. The elimination of the dependents deductions and cap on property taxes were the primary contributor.

I will let you know in October when I file. I have a business so I pay a CPA to do my taxes. I cannot remember not itemizing. The rules seem to change every year in some small way. I figure that if my taxes are more I probably made more money. I am in favor of simplfying the tax code and we seem somewhat closer to that for many filers.