Federal Tax Cuts Delivered for us - your experience?

[Mulligan]

Yes, my post and your edit crossed.

But I am nowhere near the 22% bracket for ordinary income. I am barely in the 12% bracket. I am also in the 15% bracket for QD and LTCG. Half of my (taxable) income is taxed at 0%, about 1/4 is taxed at 10.5% (mostly 10% with a sliver at the marginal 12%), and the rest at 15% for QD and LTCG. So, whatever my marginal rates are, they ain't 22%!

I ran the calculator, I am retired in 24% bracket and almost 18% effective tax rate. That being said Scrabbler I bet despite your 12% bracket you could buy me out and sell me into slavery!

 

[jazz4cash]

Hmm. I used H&RB and got the results I described. I entered property tax and state income tax into H&RB (total was above $10K). Are you saying that the MD form excludes property tax from the SALT limit? If so, HRB did not do that for me.

The HR Block result was correct in my case right from the start. I did not have to enter any property tax or income tax details into the state return program since it took the data from the Fed return. The more I look at this, maybe I was overpaying all these years.

 

[Alan]

I did an FBAR for myself and my wife this week. I’lll do the Fed return in May and then the LA State return and then our son’s FBAR and his Fed return. Before the end of the year I’ll do my and my wife’s HMRC returns. That is 8 FBARs/tax returns to do per year. My son doesn’t need to file an HMRC return as he has no foreign income. By the time he starts drawing SS I’ll be long gone so he will have to figure out how to do his own HMRC self assessment at that point

Just as well I am retired with time on my hands.

 

[socca]

Printed a draft version of my federal and state tax returns in TurboTax today (still some K-1s not yet received) - 173 pages. So much for tax simplification.

 

[Jeb-NY]

Printed a draft version of my federal and state tax returns in TurboTax today (still some K-1s not yet received) - 173 pages. So much for tax simplification.

Changes were probably not meant for that complicated a life. Mine went from 8 to 4 and should go to 3 next year. One of those pages only had boiler plate info about my wife and I.

 

[Dash man]

I hope to finish my taxes tomorrow or the next day. Property tax deductions were quickly maxed out with two properties. The high cost of health insurance and other medical expenses easily put us over the standard deduction of $24k. Charitable contributions give us $.22 back for every dollar. Still have to complete entering the rest of our medical expenses and expenses for our rentals. Fortunately the property taxes on those can come off the income. We’ll be getting a nice fat refund this year because of tax withholding on DW’s restricted stock that vested. Next year should be much easier.

 

[Redbugdave]

Looking at my taxes this time around...I came out better this year than previous. About 2% lower in taxes. I used the standard deduction since I owe nothing and not much to claim anyways.

 

[zinger1457]

Haven't itemized in years, my AGI for 2018 was ~$750 more than 2017, will end up paying about $1K less in taxes for 2018.

 

[scrabbler1]

I saw a portion of Nina Olson's appearance last week on C-Span which was shown again yesterday. Olson, in case you are not aware, if the Taxpayer Advocate who works for the IRS but acts in an ombudsman role.

In a response to a caller to C-Span's Washington Journal call-in show, she announced her email address. I took it down and wrote her a lengthy email detailing my complaints about the new tax forms, similar to those I have posted here and in Bogleheads. A few hours later, she replied but it wasn't a typical form-letter reply. She told me she would like to, with my permission (without my name or email address, forward my email to her contacts at the IRS, the Treasury Department, and Congress.

The website describing Ms. Olson in the National Taxpayer Advocate is

https://taxpayeradvocate.irs.gov/about/our-leadership

Once there, you can go to the home page.

If you want her own email address, let me know and I will PM it to you. I don't know if I should post it publicly without her permission. She had said it on the C-Span show with some hesitation.

 

[pb4uski]

Agh, 4 tax returns? I think that would drive me to drink! ...

Since I've completed 4 of the 7 tax returns that I do it sounds to me like it is high time for a drink!

 

[kite_rider]

I hope to finish my taxes tomorrow or the next day. Property tax deductions were quickly maxed out with two properties. The high cost of health insurance and other medical expenses easily put us over the standard deduction of $24k. .

Just curious, how are you deducting your health insurance premiums? I was under the impression these were not deductible for the normal FIRE'd folks..

 

[Dash man]

Just curious, how are you deducting your health insurance premiums? I was under the impression these were not deductible for the normal FIRE'd folks..

They are if paid with after tax money and it’s above 7 1/2% of your income when combined with other medical expenses. For 2019 and forward it’s 10%. You can only deduct what’s paid out of pocket.

 

[cathy63]

Just curious, how are you deducting your health insurance premiums? I was under the impression these were not deductible for the normal FIRE'd folks..

If you pay your premiums with after-tax money, then they are deductible as medical expenses on Schedule A. Only the portion of medical expenses that exceeds 7.5% of your income is deductible.

 

[statsman]

If we hadn't sold our house in October 2018, we would have likely seen a small increase in our federal tax bill (~$500 or roughly 10% of our tax bill). Because of our medical expenses, a good amount of it from my under-65 medical plan's monthly premiums, we would have been able to deduct a lot more of the medical expenses than under the current tax law. Especially in combination with a now capped SALT deduction and charitable contributions.

With the house sale and capital gains well beyond the $500K exemption, it wiped out our ability to deduct medical expenses, and we ended up using the standard deduction (we might have been a little over the standard deduction under the old tax lax). Because of that, we're probably ahead close to $1,500 compared to the old tax law.

 

[Dash man]

We paid over $25k in health insurance premiums alone. We maxed out the property tax deduction with two personal use homes. Plus with other medical costs and charitable giving, we were well over the standard deduction. Getting a nice refund too. Our Jersey shore home gave us some nice deductions off the income we made from it. For 2019 our taxable income will be easier to predict, so our quarterly estimated taxes should be easier to predict.

 

[kite_rider]

They are if paid with after tax money and it’s above 7 1/2% of your income when combined with other medical expenses. For 2019 and forward it’s 10%. You can only deduct what’s paid out of pocket.

So is that 7.5% of regular taxable income - like money from a j*b. Or is it 7.5% of AGI (or MAGI)? I ask because I have mostly interest, qualified dividends and LTCG and almost no 'income' in the pre-FIRE sense of the word.

 

[statsman]

So is that 7.5% of regular taxable income - like money from a j*b. Or is it 7.5% of AGI (or MAGI)? I ask because I have mostly interest, qualified dividends and LTCG and almost no 'income' in the pre-FIRE sense of the word.

7.5% of AGI (10% starting in 2019, as noted earlier).

 

[Dash man]

7.5% of AGI (10% starting in 2019, as noted earlier).

+ 1

 

[Dash man]

One other thing I learned this year when deducting medical expenses, is that my long term care insurance for DW and I is also deductible. That was a nice surprise.

 

[scrabbler1]

So is that 7.5% of regular taxable income - like money from a j*b. Or is it 7.5% of AGI (or MAGI)? I ask because I have mostly interest, qualified dividends and LTCG and almost no 'income' in the pre-FIRE sense of the word.

I always found having to exclude 7.5% or 10% of AGI from my otherwise deductible health insurance premiums rather unfair. Those in employer-sponsored group plans could always deduct 100% of their premiums (through pretax payroll deductions), even if they didn't itemize their deductions. With an AGI of ~$40k, I would have to exclude as much as $4k of my premiums from being able to deduct them. At 12%, that costs me $480.

One time, a few years ago, when I was working on my income tax spreadsheet, I had to replace an estimated (Qualified) Dividend amount with a slightly larger one. I thought it wasn't going to increase my federal taxes due because I was in the 0% bracket for QD. However, my taxes did rise a little bit. After carefully examining the spreadsheet to make sure there were no errors, I realized that the slightly higher dividend amount raised my AGI, and that further reduced my deductible HI premiums and raised my taxable income, increasing my tax bill a little bit. So, 0% wasn't quite 0%.

 

[Maenad]

I'm not sure the impact of the tax law changes, but I just talked to our tax guy. We owe some to Fed and are getting some back from State. It nets out to less than $100 either way.

I knew this was one of the few places I could celebrate being that close to breaking even and people would get it.

 

[rk911]

I'm not sure the impact of the tax law changes, but I just talked to our tax guy. We owe some to Fed and are getting some back from State. It nets out to less than $100 either way.

I knew this was one of the few places I could celebrate being that close to breaking even and people would get it.

nicely done!

 

[Philliefan33]

Our tax bill went up this year because our total income was 19% higher this year than 2017, due to a windfall stock transaction and logging on the family farm. Our taxable income was 23% higher than last year, but our effective tax rate (total income/tax) dropped from 14.2% to 12.2%.

 

[DJRR]

My taxable income was ~ 20k higher due to no personal exemptions and capping my tax deductions. I ended up paying 2% more as a % of AGI due to the lower rate.

However, I got bailed out by having a higher child credit and my daughter started school this year and I got a $5k credit. If I had no kids I would have been hurt by the "tax cut" but came out OK with kids and school. I think I could have had the education credit under the old rule, so I guess I broke even under the new law. At least until my kids age out, which will be before the 10 years of the legislation.

 

[Timeisprecious]

... I got bailed out by having a higher child credit and my daughter started school this year and I got a $5k credit. If I had no kids I would have been hurt by the "tax cut" but came out OK with kids and school. I think I could have had the education credit under the old rule, so I guess I broke even under the new law. At least until my kids age out, which will be before the 10 years of the legislation.

I thought I heard that the tax cut legislation for individuals was now permanent.