Federal Tax Cuts Delivered for us - your experience?

[Independent]

For me it was relatively good news. The law doesn't look good however for the Federal deficit which I'm more concerned about than a couple of % lower personal taxes.

+1

The new law lowered our taxes a little for 2018.

This year's decrease is pretty simple for us. The new standard deduction is more than the old (standard deduction + personal exemptions). And, the 12% rate is lower than the old 15% rate.

 

[Turboslacker]

I'm still fully employed with 3 kids and mortgage and run a small biz. Lot of moving parts with my deductions, credits, etc this year vs 2017. After many hours doing my own biz taxes then personal taxes, the result was lower taxes this year by 0.6%. Effective tax rate this year is 14.5%.

I have no complaints on how much I paid relative to income. I am one of those cases who went from getting less than $500 refund last year to owing $11K this year[emoji50]. That is a kick in the balls.

The W4 withholding tables ended up being way off relative to the estimated tax. I do believe the Feds either screwed-up their assumptions or intentionally inflated paychecks to influence acceptance by individuals of the tax overhaul.

I think this confirms that corporations benefited much much greater than workers and small biz owners. My hedge to this is to own US stocks of corporations who are benefiting and passing thru a portion via dividends and stock value appreciation[emoji106]

 

[bada bing]

I won't file until April, but I've been doing test runs on HRBlock with incomplete estimates. It looks like a ~$3K savings for me. My situation - no tax state and never itemize - should be close to a perfect fit with what the reductions targeted.

One thing I did not experience is under withholding. My withholding was a nearly perfect $3K less than last year, which matches my best estimate of the tax savings. It would be interesting to understand the mechanics of why some situations are experiencing under withholding, but not others. I have had no substantial changes in income between 2017 and 2018. My withholding is based on zero exemptions and zero dependents plus $100 per check extra withholding. I always have more withheld than necessary to cover my W2 paycheck to make up for some self employed 1099 income. I do that in lieu of estimated tax payments. I will get maybe ~$2K refund this year, same as last year and the year before.

 

[workmyfingerstothebone]

Fed Tax 2017 was 18.58%, state tax was 5.52%.
Fed Tax 2018 is 14.50%, state tax is 4.62%.


The higher federal exemptions was a benefit to us as 2018 deductions would have been 21K versus the 24K.


No W2 income for me this year, only pension and passive income.
Wife is still W2.



First year adjusting to the no W2 income so federal taxes we paid was higher than actual due by about $225/month. At least we get a nice refund. State, seem to always owe...

 

[jkern]

My taxes increased slightly. Others around me (my daughter) had a much greater increase in taxes.

In CA a lot of the Schedule A filers took a hit. The limit of SALT to $10K and the mortgage interest limit being reduced to $750K. The increased taxable income outweighed the lower tax rate.

 

[googily]

Good timing, so to speak, to have gone from the last year of MFJ to single. I come in just under the $10k SALT limit, so that new cut off didn't affect me.

I think this is my last year in the 22% bracket while I'm still working. I just moved an old rollover IRA into my 401k so that I can do backdoor Roths (while also doing mega backdoors though work), and so I won't bother to try to keep my MAGI in line with Roth levels anymore. Going to start withdrawing money from the spousal inherited IRA well into the 24% bracket to try to stay ahead of the eventual tax torpedo. I'm looking at it like a really big raise at work. [emoji16] Once I stop working, I'll try to convert more of that to Roth.

 

[MJ]

To reasonably determine how the new tax "cut" effected me, I inputted my 2018 information into my 2017 desktop version of taxact. I also overrode the 2017 standard deduction with the new 2018 deduction. I determined that my total tax went down by a mere 1% of my taxable income. The 2018 "larger" standard deduction is a bit misleading. For 2017, my std deduction $13500 + exemption $8100 + college tuition credit $2000 was $24050 while for 2018, the std deduction $25300 + college tuition credit $63 was $25363 or $1013 higher. If someone in 2017 had itemized deduction of $25,300, their total deduction + exemption would be $33,400 or $8100 higher.

 

[Just_Steve]

2017 25% tax bracket Effective rate 10.32%
2018 22% tax bracket Effective rate 8.23%

Last year had to write a check, this year I get a check.

 

[Scuba]

Yikes! That's got to be a shock.

My property taxes went up 78% when I bought my Dream Home, because they hadn't reassessed my old home in nearly forever and they assessed my new home at the purchase price. But in my case 78% wasn't that bad since my property taxes were only pushed from $956 to $1701. Our state income taxes and property taxes are not that high (but the state and local services we get for what we pay, are abysmal).

Yes, it didn’t happen all at once but with Prop 13 in CA, property taxes aren’t supposed to rise so much. But they did, partly due to a remodel we did which increased our valuation and partly due to the CA voters who seem to relish every chance possible to improve something (parks, schools, roads, social services for the homeless, etc etc), while increasing taxes to fund it.

 

[MJ]

2017 25% tax bracket Effective rate 10.32%
2018 22% tax bracket Effective rate 8.23%

Last year had to write a check, this year I get a check.

I took my 2018 income and deductions and crunched it into the 2017 taxact. Did you have the same income and deductions for both 2017 and 2018? That's the only way to compare the tax results.

 

[joeea]

STATES aren't "favored". PEOPLE make the choice where to live & what SALT and mortgage interest to pay. Why SALT should affect Fed income taxes paid escapes me.

When government changes the rules abruptly as they did, some states are "favored" and some are not. It wasn't an accident.

 

[Winemaker]

When government changes the rules abruptly as they did, some states are "favored" and some are not. It wasn't an accident.

Politicians have used taxes to alter and punish behavior since taxes where invented.

 

[HillCountry]

Once again, this is a thread about individual tax rates and how our taxes changed year-to-year.


Plenty of opportunity to discuss deficits, debts and other stuff in another thread.

...

 

[Just_Steve]

I took my 2018 income and deductions and crunched it into the 2017 taxact. Did you have the same income and deductions for both 2017 and 2018? That's the only way to compare the tax results.

A little more income and a little higher deduction for 2018.

 

[jkern]

Yes, it didn’t happen all at once but with Prop 13 in CA, property taxes aren’t supposed to rise so much. But they did, partly due to a remodel we did which increased our valuation and partly due to the CA voters who seem to relish every chance possible to improve something (parks, schools, roads, social services for the homeless, etc etc), while increasing taxes to fund it.

My property tax increases (Prop 13 - 2% per year) have averaged around 3% to 5% every year.

 

[nobody]

I had my taxes dialed in pretty good usually got a back a few hundred dollars from Fed and maybe owed State a bit as it was pretty much a wash. The SALT limits and living in MO I will now owe the Fed 4k and the state 300. I am not in a high state tax, I am not part of the dual income families, I do not have any business deducts and no mortgage interest. So I didn't look a the calculators just trusted the fake news said. Figured I would break even or owe a bit this year. Wasn't expecting that big of a tax bill.

 

[Al in Ohio]

I did mine using TurboTax a few weeks ago and was not happy with the so called tax cut. I’m paying more. At least 25% more. Losing the personal exemptions tanked everything else for us.

 

[kgtest]

I think it will depend on circumstances.

If I take 2017 income at 2017 and 2018 deductions, limitations and tax rates, my taxes would actually have been higher because of SALT limitations and the structure of my 2017 income which was skewed towards qualified income.

However, if I take 2018 income at 2017 and 2018 deductions, limitations and tax rates, my taxes are lower because of lower rates and more ordinary income than preferenced income.

OTOH, my aunt and uncle, whose income is mostly pensions and SS, are paying much less in tax in 2018.

Nailed it. My taxes are increasing, but I itemized in 2017, and did not in 2018. I also spent more money on business related expenses in 2017 vs not spending a dime on the business in 2018. So although my tax rate increased, my overall cost of living decreased and my Gross also increased. Did get a slight break on rental pass through this year though too.



Serenity afford me the opportunity to accept the things i cannot change, like changes to the tax code.

 

[kgtest]

I did mine using TurboTax a few weeks ago and was not happy with the so called tax cut. I’m paying more. At least 25% more. Losing the personal exemptions tanked everything else for us.

Me too! This single change to the code, hurt us the most. So as consumer's we just dialed back the spending.

 

[CardsFan]

Just got my brokerage statement and did a quick download into Turbotax.

Subject to further review, it looks like we had a 9% INCREASE in AGI, and a 26% DECREASE in federal taxes, compared to 2017.

FIRE'd, no pension, no SS(yet). Income is Int/Div/Cap gains plus Roth conversions and tIRA distributions. Stayed within the 12% bracket (barely). Standard deduction. Same for both years. Cap gains were higher this year, since I depleted my carried losses last year, so I am sure this contributed to the lower rate, but not by more than 3-5%.

Effective tax rate about 6%. (vs 8.75% last year)

 

[aja8888]

I just finished our Federal tax forms. Amazingly, the total owed/refunded is ZERO! Yes, no refund, no payment.


It's the first time ever and my year included quarterly tax payments, interest, dividends, SS income, IRA pulls, insurance deductions, some consulting income, business expenses, etc.

 

[joeea]

Politicians have used taxes to alter and punish behavior since taxes where invented.

No doubt about that.

The "behavior" being punished in this case appears to be living in certain states.

 

[scrabbler1]

No doubt about that.

The "behavior" being punished in this case appears to be living in certain states.

+1

 

[CardsFan]

I just finished our Federal tax forms. Amazingly, the total owed/refunded is ZERO! Yes, no refund, no payment.


It's the first time ever and my year included quarterly tax payments, interest, dividends, SS income, IRA pulls, insurance deductions, some consulting income, business expenses, etc.

What are the odds of that? Time to go to the casino . Of course I doubt you would get out of there for ZERO.

 

[aja8888]

What are the odds of that? Time to go to the casino . Of course I doubt you would get out of there for ZERO.

I don't know what the odds are, but I couldn't believe it when it showed up on the screen! And I double checked all the entries.