Taxes time 2018 - what to expect ?

[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]

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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.

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[audreyh1]

Quote:

Originally Posted by GrayHare 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]

Quote:

Originally Posted by 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.

does calculators confirm this assertion?

[pb4uski]

Quote:

Originally Posted by 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.

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.

[pb4uski]

Quote:

Originally Posted by GrayHare 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.

There is a check box just above the filing status to use 2018 tax rates... has been there since the spring.

[gerntz]

Quote:

Originally Posted by 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.

Have yet to figure out/understand how one's SALT should affect one's Fed tax obligations. SALT is a choice.

[lucky penny]

I'm also in a high SALT state (NY) & expect to pay more. My taxes took a big jump last year because my income did too (not complaining), especially with RMDs and Social Security. I had too little withholding for both -- just 10%, which turned out to be not nearly enough, so the bottom line was an unpleasant surprise. I increased the withholding this year, but I expect the cap on the SALT deduction will cost me.

On the other hand, starting next year the largest source of my income will be my state pension (not my salary), which is not subject to state and local taxes, so next year's bottom line should look quite different. Another reason to look forward to retirement!

[Helena]

Quote:

Originally Posted by pb4uski 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.

Your post reads very familiar. Appears to be the very same post you responded to me on a previous 'RMD tax' post weeks ago. Obviously, you have an unusual 'pro-RMD tax' ax to grind on that subject.

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[Just_Steve]

Quote:

Originally Posted by lucky penny I'm also in a high SALT state (NY) & expect to pay more. My taxes took a big jump last year because my income did too (not complaining), especially with RMDs and Social Security. I had too little withholding for both -- just 10%, which turned out to be not nearly enough, so the bottom line was an unpleasant surprise. I increased the withholding this year, but I expect the cap on the SALT deduction will cost me. On the other hand, starting next year the largest source of my income will be my state pension (not my salary), which is not subject to state and local taxes, so next year's bottom line should look quite different. Another reason to look forward to retirement!

Thats only because NY is slick and taxed you on your pension contributions at the higher rate while you were working.

[pb4uski]

Quote:

Originally Posted by Helena Your post reads very familiar. Appears to be the very same post you responded to me on a previous 'RMD tax' post weeks ago. Obviously, you have an unusual 'pro-RMD tax' ax to grind on that subject. .

Ah, so you're another one of those folks who misunderstood that tax-deferred didn't mean tax-free eh?

I went back and looked.... it was a good guess.

http://www.early-retirement.org/foru...ml#post2102337

[Helena]

Quote:

Originally Posted by pb4uski Ah, so you're another one of those folks who misunderstood that tax-deferred didn't mean tax-free eh? I went back and looked.... it was a good guess. http://www.early-retirement.org/foru...ml#post2102337

I am one of many seniors who hate being F0RCED by draconian RMD laws to take out more tax-deferred money every year than I need or want which not only raises my RMD taxes, but also causes my Social Security to be taxed. Thank God there are at least some lawmakers who are now taking a second look at that abomination.

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[MarieIG]

I still don't know what the tax hit is going to be this year. I anticipate that it will be more. We paid approximately 61k in SALT last year, and will be taking the standard deduction this year, but should no longer be subject to the AMT. I had more $ with held from our paychecks (again), continue to take zero deductions, and am paying extra estimated taxes.

[pb4uski]

Quote:

Originally Posted by Helena I am one of many seniors who hate being F0RCED by draconian RMD laws to take out more tax-deferred money every year than I need or want which not only raises my RMD taxes, but also causes my Social Security to be taxed. Thank God there are at least some lawmakers who are now taking a second look at that abomination. .

Hold on. RMDs have been required forever so it should not have come as a surprise... if you objected to ultimately paying tax on that income through RMDs then perhaps you should have never deferred it to begin with.

Similar story on SS... that has been taxed for a long time.... and only a portion of your Social Security is taxed... roughly the same portion that exceeds what you contributed... no different than paying tax on benefits in excess of contributons of any other contributory pension plan.

Put it all together and it is obvious that you just don't like taxes... sounds like you expect a free ride in retirement... sorry, but it just doesn't work that way... never has.

[DrRoy]

Quote:

I suspect we'll be paying less but haven't done any math on it yet.

+1. We haven't had enough to itemize for a couple years so the increase in the standard deduction will help. This will be my first full year of RE so the income will have hit a bit of a lower plateau. I expect to do some recharacterization of the regular IRA to Roth within the 12% bracket.

[target2019]

I went with higher 401k contribution after using the whatif calculator in TurboTax last April. So I'm expecting to be very close on Federal taxes.

[pj.mask]

Quote:

Originally Posted by pb4uski Hold on. RMDs have been required forever so it should not have come as a surprise... if you objected to ultimately paying tax on that income through RMDs then perhaps you should have never deferred it to begin with. ..... Put it all together and it is obvious that you just don't like taxes... sounds like you expect a free ride in retirement... sorry, but it just doesn't work that way... never has.

It does sound like you’re trying to pick a fight.

I didn’t read their post the same way. It sounded like they had high deductions SALT - and was using that to manage his fed taxes. I don’t think it is unreasonable to complain about changes to tax law that specifically targets you based on your state. (This was pretty clear during the creation of the law)

I also want to thank him; those high SALT tax states subsidize the low SALT states (he pays more tax and that tax money gets redistributed).

Personally, we will probably save a few %. Any difference would be less than raises so haven’t been able to pull out the numbers.

[pb4uski]

I think you are mixing up my posts. The post that you quoted was responding to Helene's incessant whining about about being FORCED by drakonian rules to take out RMDs. (rules that have been around forever and she should have known about).

In my response to beowulf's post on SALT and RMDs, I was responding more to the last two sentences, where he seemed to be mad that RMDs were increasing his taxes, I was not responding to the SALT part. In retrospect, perhaps I should have clipped the earlier part of his post that I quoted, as like you, I can understand folks that are upset with the SALT changes.

Where I would not agree with you is that I don't think people use SALT to manage their taxes... who would move into a high tax jurisdiction just because of the federal tax benefits? That and I don't see SALT being redistributed at all, the money is spent in those local and state jurisdictions so I don't see how people in low SALT areas benefit from SALT paid by people in high SALT areas (and I live in what is commonly considered a high SALT area).

Quote:

Originally Posted by beowulf ..... Plus we both had RMDs this year, so we can see where this is heading. No way to reduce taxable income = more taxes.

[Fedup]

Upset about taxes, no, I’ve learned to make lemonade out of lemons. I converted to top 22%, much higher limits than years before. Originally I only planned to convert to the old 15% rate.

[lucky penny]

Quote:

Originally Posted by Just_Steve Thats only because NY is slick and taxed you on your pension contributions at the higher rate while you were working.

True enough. On the bright side, I was pleasantly surprised to learn that NY does not tax Social Security income, unlike some states.