Taxes time 2018 - what to expect ?

[wanaberetiree]

So with new taxes time around the corner I wonder what people expect.

For example, I am in CA and wont be able to deduct state taxes etc more then 10K. Do people in similar situation think the tax liability will be higher then in 2017 or less?

I finally understood that AMT threshold will 1M which will help.

 

[Bamaman]

I just finished my 2017 taxes last night. My daughter rearranged my office while I was on vacation, and I couldn't find all my records. Finally went to the IRS for a Wage and Income Statement to see what funds they were showing.

Really have not thought about this year's taxes. Fortunately my business is very simple, but RMD's start next year on my wife. Thankfully I didn't owe any additional taxes.

 

[Walt34]

I suspect we'll be paying less but haven't done any math on it yet. Our return is pretty simple, pension, SS, and a little bit of interest/dividends. The increased standard deduction will help and since our property taxes are well under five figures that won't change. DW did close out a small IRA (a bit over $3k) so we'll get a 1099 for that I suppose. Basically I'll just get TurboTax and see what it says.

 

[Souschef]

I know I will be paying more. This year I had to take an extra 14K RMD. Not complaining , though

 

[Dash man]

We’ll be paying much less since we made much less taxable income this year, but will still pay taxes on dividends and capital gains. The $10k cap on property taxes will hurt us, but we can deduct much of our health insurance premiums this year since we can still itemize.

 

[Philliefan33]

I think the new tax law will cause us to pay about the same. We itemized about $22K last year, will take the (higher) standard deduction this year. But we all lost the personal exemptions so our taxable income will be a little higher. But we might get a little help from the 20% deduction on “pass through” income, if it applies to rental real estate as some articles have posited. Then of course the tax rate for our bracket went down a little.

I will take a closer look at our projected income soon, to see if DH needs to bump up the tax withholding from his pension for the rest of the year to make sure we are in safe harbor territory.

 

[wanaberetiree]

Found this a simple useful calculator -
https://smartasset.com/taxes/income-taxes

 

[TrvlBug]

Our tax man did a 2017/2018 comparison based on same income. Our income will only vary with cap gains/dividends. His calculations show that we will pay about $1K less. We're in CA, so will be able to deduct only $10k for property/state taxes vs. ~$25K last year. However, elimination of AMT will put us in the less column.

That said, I believe we will go into the next tier with IIRMA on DH's Medicare costs, so, overall, will pay a bit more. I need to sit down and look at doing QCDs to bring our income down. Up to this point we only made DAF contributions.

 

[beowulf]

Definitely more here. Had $42K in itemized deductions last year. After being limited to $10K for SALT, elimination of interest on the first $100K of a second mortgage, and a few other things, we can muster maybe $24K in deductions. Will have to go with standard deduction for 2 seniors. Plus we both had RMDs this year, so we can see where this is heading. No way to reduce taxable income = more taxes.

 

[bingybear]

It depends on what I decide going forward. The last 3 years I have collected my distributions in December and calculated the the roth conversion amount and taxes. The last 3 years I've only done conversions up to the top of he 15% bracket. If I do the same level of roth conversions then I would expect little difference. I would just need minor tweaks. If I roth convert to a higher level then I would expect significantly different taxes.

I have a spreadsheet that models roth conversions assuming different investment accounts continue growing in a similar manner and distributions are used to pay taxes and support living expenses. The taxes on these these distributions are also included and assume the tax proportions of LTCG, STCG and Q divy are consistent over time.

I expect I will do larger conversions and taxes will be higher for that reason. Really no reason to compare "what-if" with the past. I will be running more "what-if" on different conversion amounts.

Unfortunately I've shifted my AA and realized some LTCGs in a way that is not modeled in the spreadsheet. So more manual updates.

 

[Fedup]

We will be paying more even for the same income as last year, we’re in California. But I’m still waiting to see if CA still allows those deductions even if Federal only allows up to $10k. The two systems don’t always aligned.

 

[foxfirev5]

All the major tax software has estimates reflecting the new tax laws. I ran both turbo tax and HR Block with the same results.

 

[trirod]

I know I'll be paying quite a bit less based on the projections I ran, BUT when the IRS changed the withholding tables in February, they were too optimistic about the benefits I would be receiving, so I had to submit a new W-4 to our payroll dept to take out additional tax to make sure I wouldn't owe too much next April.

My benefits are from a mix of things - mainly not being in AMT any more, but also the marriage penalty mostly going away (my wife and I make roughly the same so that was always an issue in the past).

 

[Alan]

All the major tax software has estimates reflecting the new tax laws. I ran both turbo tax and HR Block with the same results.

Same here, and for the same income we would be paying less. What it does mean is that I will increase the amount I convert to Roth, to the top of the 22% band. I file with no State income tax and haven’t itemized deductions in years.

 

[GrayHare]

All the major tax software has estimates reflecting the new tax laws. I ran both turbo tax and HR Block with the same results.

Do you mean tax year 2017 software has recent updates that make estimates that reflect the tax law changes for tax year 2018?

 

[Alan]

Do you mean tax year 2017 software has recent updates that make estimates that reflect the tax law changes for tax year 2018?

Yes, they have 2018 available.

With TT you can search for the “what-if” form and one of the options you can select is 2018

 

[GrayHare]

Yes, they have 2018 available.

With TT you can search for the “what-if” form and one of the options you can select is 2018

Yes, that feature has been around for years. Last time I looked during the spring it did not take into account 2018 tax law changes.

 

[scrabbler1]

At best I'll break even. What I save with the higher Standard Deduction I will lose with the loss of the Personal Exemption because my itemized deduction is slightly higher than the old SD. As for income tax rates, all or nearly all of it is either in the unchanged 10% bracket (ordinary income) or it is investment income whose tax rates are unchanged (0% and 15%).

 

[pb4uski]

About the same here. The last couple years I have done Roth conversions to the top of the 0% LTCG rate... if I copy my 2017 return to 2018 using TT What-If and adjust my Roth conversions to the top of the 0% LTCG bracket of $77,200 in TI for 2018 my federal tax is $57 lower.

Since we won't be itemizing any longer I will no longer need to keep all the letters from charitable organizations acknowledging my contributions.

 

[kaneohe]

So with new taxes time around the corner I wonder what people expect.

For example, I am in CA and wont be able to deduct state taxes etc more then 10K. Do people in similar situation think the tax liability will be higher then in 2017 or less?

I finally understood that AMT threshold will 1M which will help.

If you were affected by AMT last yr,you weren't deducting state taxes anyway
since they were added back for AMT purposes. You can use this
https://www.mortgagecalculator.org/calcs/1040-calculator.php

to estimate 2018 taxes. You also use Taxcaster or the HR Block tax calculator.....they look like 2017 but on the last page will produce both 2017 and 2018 results for the same income.

 

[gerntz]

Since we will have higher income, just going to pay more than last year's bill & see what happens. Have no clue as to how accurately account for our income changes & tax law changes. Our state income tax changed too.

 

[Helena]

.


2018 ?

If one doesn't know what to expect now that tax year 2018 is two-thirds over... it may be too late.

I'm now in the planning stage for tax year 2019. Many of the current IRS figures will be increasing with inflation. Inflation figures the IRS will announce in October.

.

 

[audreyh1]

Yes, that feature has been around for years. Last time I looked during the spring it did not take into account 2018 tax law changes.

I have used it to do 2018 estimates and I’m pretty sure they are using the new 2018 numbers.

 

[wanaberetiree]

Definitely more here. Had $42K in itemized deductions last year. After being limited to $10K for SALT, elimination of interest on the first $100K of a second mortgage, and a few other things, we can muster maybe $24K in deductions. Will have to go with standard deduction for 2 seniors. Plus we both had RMDs this year, so we can see where this is heading. No way to reduce taxable income = more taxes.

does calculators confirm this assertion?

 

[pb4uski]

Definitely more here. Had $42K in itemized deductions last year. After being limited to $10K for SALT, elimination of interest on the first $100K of a second mortgage, and a few other things, we can muster maybe $24K in deductions. Will have to go with standard deduction for 2 seniors. Plus we both had RMDs this year, so we can see where this is heading. No way to reduce taxable income = more taxes.

Was there an aspect of "tax-deferred" retirement savings that you forgot about? Was it ever represented that it would be tax-free? Were you unaware of RMDs until recently? What was your marginal tax rate when you saved he money that is now subject to RMDs? What is your marginal tax rate now?

Sounds like a first-world problem to me.