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Tax Owed for 2018 vs 2017
Old 12-30-2017, 05:46 PM   #1
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Tax Owed for 2018 vs 2017

I am still confused, not at the new tax bracket, but what the calculation for actual tax owed would be in 2018.

Example: 25% Married Filing Separate in 2017 MAGI range of $37,950 to $91,900 = TAX OWED of $5,226.25 plus 25% of the excess over $37,950. Example for someone with MAGI = 75,000 TAX OWED would have been: (75k - 37,950)x 0.25 + $5226.25 = $14,488.75

I understand, had there been NO tax bracket change, 38,700-$93,700 would have been the 2018 25% range and this same example has the same rate in 2018.

BUT with the change in brackets none of the articles I read state that you will have a baseline PLUS the 25% of the excess over whatever the bottom of the bracket is.

SO for the sake of the $75k MAGI example, is the 2018 TAX OWED = $75,000 x 0.25 = $18,750 ??

Meaning the tax bill this year would be 4261.25 higher with the new change?
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Old 12-30-2017, 05:55 PM   #2
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I understand how one gets to MAGI in 2018 vs 2017 will be different with the elimination of AMT, Estate Tax reduction, personal exemption elimination, standard deduction increases etc. Also, no more moving expenses, misc expenses, tax prep expenses will be allowed. If you have a kid, extra $1000 up to 2 kids etc etc.
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AA (Stock/Bond/Cash ): 97.5/0/2.5% MIX (Small/Mid/Large): 25/25/50% BLEND(US/Foreign): 100/0%, REIT (Real Estate Equity): ~50% of Assets

FIRE in 2031 @ 50yrs old (+/- 2yrs) w/ a hypothetical $2.5mil portfolio, 3 appreciated homes worth $1.0mil and rental income to fund my gap years until RMD. Assets will go to an inherited IRA where I plan on watching the investments grow until I die or the trust gets executed.
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Old 12-30-2017, 06:22 PM   #3
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One is not taxed on MAGI. One first has to calculate taxable income.

Also tax credits are kinda nice, too.
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Old 12-30-2017, 10:32 PM   #4
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Good pt Lol.
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Old 12-30-2017, 11:47 PM   #5
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No... the number you add in your 2017 is just the multiplication of the lower tax brackets times the full amount in that bracket...


So, in 2018, take the first bracket up to the max and multiply by the rate.. now subtract that amount from 75K and you have what needs to be taxed in the next bracket... if that bracket is full, subtract that amount from $75K and then THAT is what is multiplied by 25%....

I do not want to look up the ranges...
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Old 12-31-2017, 08:18 AM   #6
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Originally Posted by Texas Proud View Post
No... the number you add in your 2017 is just the multiplication of the lower tax brackets times the full amount in that bracket...


So, in 2018, take the first bracket up to the max and multiply by the rate.. now subtract that amount from 75K and you have what needs to be taxed in the next bracket... if that bracket is full, subtract that amount from $75K and then THAT is what is multiplied by 25%....

I do not want to look up the ranges...

Perfect this makes 100% sense to me. I've been staring at turbo tax and running tax scenarios for a week and really started to confuse myself.
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Old 12-31-2017, 09:26 AM   #7
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We live in California, where State and Local Taxes are high. In 2018 we are limited to write off on Itemized deduction only up to $10K in State and Local Taxes we pay what is going to reduce our Itemized deductions a lot. It might be close to standard deduction. I know that our Taxes are going up in 2018.
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Old 12-31-2017, 10:31 AM   #8
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I am almost sure mine will go down.
But I have to change strategy on my donations. I will be giving more donations as QCD's from my IRA. I already have the forms made out. All I have to do is insert the donee and have it notarized. I sent a sample to my fund manager and got it blessed.
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Old 12-31-2017, 10:31 AM   #9
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Quote:
Originally Posted by kgtest View Post
I understand how one gets to MAGI in 2018 vs 2017 will be different with the elimination of AMT, Estate Tax reduction, personal exemption elimination, standard deduction increases etc. Also, no more moving expenses, misc expenses, tax prep expenses will be allowed. If you have a kid, extra $1000 up to 2 kids etc etc.
AMT was not eliminated - the threshold (exemption) was raised.
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Old 12-31-2017, 10:46 AM   #10
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Originally Posted by Souschef View Post
I am almost sure mine will go down.
But I have to change strategy on my donations. I will be giving more donations as QCD's from my IRA. I already have the forms made out. All I have to do is insert the donee and have it notarized. I sent a sample to my fund manager and got it blessed.
That seems like a good deduction. You never get the money, so you should not have to claim it.

My taxes will definitely go down, as much of it is rental income coming in through a K1. I mostly have single member LLCs taxed as a S-Corps. I should see a $2500+ cut in what I am paying.

Most of Americans will see a tax cut. Especially if they have kids. The members on this forum may be bad examples to paying less taxes, as many of them are obviously very well off.

Quote:
The majority of Americans will be getting a tax cut in 2018 under the new bill. Couples with children will especially benefit, especially if they live in places with low state taxes.

https://www.washingtonpost.com/graph...=.0bc670302116
Quote:
...80 percent of all Americans will see their taxes reduced under the bill -- and the "losers" are limited to just five percent (largely upper income filers from high-tax blue states).

...80 percent of filers will get a tax cut, roughly 15 percent will see no change, and just five percent will get an appreciable tax increase

https://townhall.com/tipsheet/guyben...icans-n2424201
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Old 12-31-2017, 02:02 PM   #11
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Originally Posted by Senator View Post
That seems like a good deduction. You never get the money, so you should not have to claim it.
Most of Americans will see a tax cut. Especially if they have kids. The members on this forum may be bad examples to paying less taxes, as many of them are obviously very well off.
I agree, Senator, this forum is what in statistics is called a biased sample. Most, if not all of our posters have got to be in the top 25% as far a net worth is concerned.
This was brought home to me in talking to my copilot, who was financially devastated by the heavy medical bills from his late wife.
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Old 12-31-2017, 11:10 PM   #12
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Has anybody heard of any of the major tax software companies adding a capability to this year's program to compute what the 2018 tax bill would be, given the numbers entered for 2017?
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Old 01-01-2018, 07:10 AM   #13
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^^^ No, probably way too early to expect that.
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Old 01-01-2018, 08:44 AM   #14
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I expect higher taxes due to starting both RMD's & full SS.
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