Federal Tax Cuts Delivered for us - your experience?

[W2R]

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.

Impressive!!! I never heard of that happening before. Congrats on some very astute judgment calls when determining your quarterly estimated tax payments.

 

[scrabbler1]

My (snake-bit) friend, whose taxes I do, had a zero amount owed and zero refund due. His name is Steven so I described it as (wait for it....) "Even Steven!"

 

[audreyh1]

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.

Maybe they ring a big bell at the IRS when they get and verify one of those!

 

[timo2]

I'm not surprised that all the diligent planners on ER Forum don't have an issue with the new tax law.

 

[aja8888]

Maybe they ring a big bell at the IRS when they get and verify one of those!

Unless they challenge a few small consulting business deductions that I have receipts for, let them have at it. Everything else is on one of the forms that they electronically track.

 

[Souschef]

Sometimes we have to pay the “success” tax. It’s a good problem to have.

+1
My RMD went up 26% between 20017 and 2018, but that also means my IRA went up almost that amount.

 

[retiresumtime]

My (snake-bit) friend, whose taxes I do, had a zero amount owed and zero refund due. His name is Steven so I described it as (wait for it....) "Even Steven!"

Lol.... I like it

 

[joeea]

I'm not surprised that all the diligent planners on ER Forum don't have an issue with the new tax law.

Do you think it's the "diligent planning" at work, or the "early retirees are wealthier than most and thus benefit more from the cuts" at work?

 

[gerntz]

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

It wasn't particularly abrupt. It was passed in 2017 to go into effect for 2018. People had 2018 to change their behavior. That's not a short time.

Again, STATES aren't affected. PEOPLE are affected. People favored were lower income folks in general. Sorry about that.

 

[gerntz]

No doubt about that.

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

How is people being required to pay more similar Fed income tax for the same AGI punishing anyone?

If anyone is being punished, it's those that choose to pay high state & local taxes. Why do that if you don't like it? Why should those that don't make that choice subsidize those that do? Ridiculous to me.

 

[ERD50]

Do you think it's the "diligent planning" at work, or the "early retirees are wealthier than most and thus benefit more from the cuts" at work?

Careful about "wealthier" and "income" for income tax purposes. Many here have very low taxable incomes, though they may be wealthy by most other measures.

-ERD50

 

[athena53]

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.

You're not alone. I'm still waiting for the downloads from the brokerages but it looks like I'm also paying about 25% more on income comparable to 2017. Thank heaven I'm not in a state where I get hit by the SALT limitation, but the loss of the personal exemption and the Miscellaneous deduction affected me and the increased standard deduction had no effect. I'm Single so it was half the level for couples anyway, and I still have enough deductions that I can't "bunch" into other years that I exceed the $12,000 Single level.

 

[mrfeh]

People favored were lower income folks in general. Sorry about that.

Actually, higher income folks were favored:

 

[scrabbler1]

It wasn't particularly abrupt. It was passed in 2017 to go into effect for 2018. People had 2018 to change their behavior. That's not a short time.

Again, STATES aren't affected. PEOPLE are affected. People favored were lower income folks in general. Sorry about that.

WHAT? The law was passed in the final days of 2017. Remember how it took some time for the IRS to create new withholding tables and forms while we were already in 2018?

"Change their behavior?" You are talking about relocating one's residence to counteract the SALT limitation. That's a little more complicated than changing one's cable TV provider or buying a different car if gas prices spike, for example. Moving to a new place, perhaps hundreds of miles away, has costs, both tangible and intangible. It would include needing a new job which would include losing any longevity benefits. If you have kids, they, as well as yourself, would be uprooted and lose local support networks and not be near friends, neighbors, relatives. The kids would be going to new schools.

The new tax law was carefully crafted to favor certain people and to disfavor certain people, many of whom have no choice but to take it on the chin and pay more in taxes. It was no accident.

 

[ERD50]

A bunch of data points isn't really telling me much. Perhaps I missed it, but is there a source somewhere that would have a graph for 2017/2018 total tax versus taxable income, with separate lines for standard deduction and a variety of itemized deductions. That would be informative.

The wild card is the SALT limit. You'd need to create scenarios for both high/low SALT conditions. But an interactive tool might be 'fun'.

-ERD50

 

[ERD50]

...

The new tax law was carefully crafted to favor certain people and to disfavor certain people, many of whom have no choice but to take it on the chin and pay more in taxes. It was no accident.

And I think people could just as well say that the old tax law was "carefully crafted to favor certain people and to disfavor certain people, many of whom have no choice but to take it on the chin and pay more in taxes. It was no accident.".

If you decide to live in a high SALT state, it is reasonable that you feel you are getting a benefit for those higher taxes. You get better services, or the 'competition' for living in a desirable area has driven up the cost of everything, including taxes. So why should someone in a low SALT area, subsidize your benefits?

I'm not saying that viewpoint is right/wrong, just that I think it is an equally valid one.

It has probably been discussed, but any flow of Fed taxes from high SALT states to low SALT states probably is consistent with other wealth distribution policies in the country.

-ERD50

 

[scrabbler1]

Doubling the standard deduction already favors those who live in low-SALT states while neither helping nor hurting those who live in high-SALT states (because the would continue to itemize). That by itself didn't raise the howls of those in high-SALT states. But capping SALT hurts only those in high-SALT states. Taken together, those in high-SALT states were hurt at the same time those in low-SALT states were helped. This is why I say the new law was so carefully crafted to favor one group of people while hurting another group of people, based mainly on geography.

 

[nobody]

Whats the definition of low and high SALT rates? It appears to me anybody who lives in a state with any income tax is a high SALT rate, its 4% in MO and it hit me hard.

 

[ERD50]

Doubling the standard deduction already favors those who live in low-SALT states while neither helping nor hurting those who live in high-SALT states (because the would continue to itemize). That by itself didn't raise the howls of those in high-SALT states. But capping SALT hurts only those in high-SALT states. Taken together, those in high-SALT states were hurt at the same time those in low-SALT states were helped. This is why I say the new law was so carefully crafted to favor one group of people while hurting another group of people, based mainly on geography.

Well, I see no way to respond to that w/o crossing the line on politics that will close the thread, so I won't.

edit: wait, I found one: geography?

-ERD50

 

[ERD50]

Whats the definition of low and high SALT rates? It appears to me anybody who lives in a state with any income tax is a high SALT rate, its 4% in MO and it hit me hard.

I think "high" is when the combination hits the SALT limit and that you would have exceeded the standard deduction w/o the SALT limit. Otherwise, it doesn't matter to your Fed tax.

-ERD50

 

[db79]

My effective tax rate for 2018 is a half of a percentage point lower than 2017 despite an increase in AGI. I'm in a high tax State and hit the $10k SALT cap and was also moved over to a standard deduction for the first time in 8 years.


I also plugged my 2018 information into TT '17 to compare how my 2018 docs faired under both the old and new tax law. Just like my effective tax rate example above I make out better under the new law.


I consider myself middle class but of course that is debatable.

 

[joeea]

It wasn't particularly abrupt. It was passed in 2017 to go into effect for 2018. People had 2018 to change their behavior. That's not a short time.

LOL! Sure, they could have moved to a different state.

Again, STATES aren't affected. PEOPLE are affected.

People in specific states.

People favored were lower income folks in general.

Nonsense. Corporations and the rich were favored.
People living in states with high state and local taxes were targeted.

Sorry about the truth.

 

[joeea]

How is people being required to pay more similar Fed income tax for the same AGI punishing anyone?

If anyone is being punished, it's those that choose to pay high state & local taxes. Why do that if you don't like it? Why should those that don't make that choice subsidize those that do? Ridiculous to me.

Tell me again which states you think are most subsidized by the federal government?

 

[Aerides]

A note: The discussion of individual or collective impact of the 2018 tax law may yield some interesting insights.
The discussion of this or that federal spending priority is not directly related to this topic.

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.

**** 3rd/final mod warning***
The mod team would like to keep this thread open for members to discuss personal impacts, but debate on the rationale of the tax laws themselves is scope creep that will result in thread closure.

 

[CardsFan]

For those that want to get a quick, accurate idea of the actual impact on them from the new tax laws, I have found this site to be pretty easy to use and accurate:

https://www.mortgagecalculator.org/calcs/1040-calculator.php

If you enter your info into the 2018 version, it will also carry over to the 2017 version, but you do have to manually turn on the exemptions for 2017.

FWIW, it calculates my 2018 taxes to within a few bucks of my Turbotax output.