Do you see a meaningful change in your income with new Tax Bill?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
surfstar
Posts: 2853
Joined: Fri Sep 13, 2013 12:17 pm
Location: Santa Barbara, CA

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by surfstar »

No.
Even if we pass less, it would definitely not be "meaningful."
User avatar
sergeant
Posts: 1849
Joined: Tue Dec 04, 2007 10:13 pm
Location: The Golden State

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by sergeant »

We will pay about $2100 less a year in Federal taxes. Nothing remotely meaningful for us.
For the ashes of his fathers, And the temples of his gods. | Pensions= 2X yearly expenses. Portfolio= 40X yearly expenses.
User avatar
whodidntante
Posts: 13116
Joined: Thu Jan 21, 2016 10:11 pm
Location: outside the echo chamber

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by whodidntante »

It is slightly beneficial for me, constrained due to the cap on deductions. I'll gain just over 1k, if I believe the calculator written by the Fox News guy even though it is doesn't ask enough questions to produce the right answer. I might finally kill my mortgage since I no longer expect to get full deductibility of the interest each year. I had been keeping it around for cheap leverage anyway, and the valuations of US stocks and global developed market bonds are in the yellow zone if not the red.
jojay
Posts: 148
Joined: Sun Apr 29, 2012 11:09 am

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by jojay »

The TRJA puts $1700 in our pocket.
Miakis
Posts: 395
Joined: Sat Aug 16, 2014 6:40 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by Miakis »

The immediate effect for us is a net tax increase of $2000-$3000. We generate a lot of long term capital gain and dividend income, for which our tax rate is essentially unchanged, so the lower overall tax brackets aren't compensating us for the loss of certain itemized deductions.

I also expect that we're going to get killed on health insurance premiums for the next couple of years until that mess gets sorted out (we buy direct from the exchange - no subsidies).

That said, the 20% deduction for S-Corps has some potential for us, but I'm waiting to see how it looks once it hits the actual Internal Revenue Code and we get some IRS guidance on it.

The change in AMT also has some long-term potential to benefit us.

As for actual impacts on my income - I'm a CPA so it kept me a lot busier with tax planning than I usually am so my December income is up over prior years. :sharebeer
mouses
Posts: 4217
Joined: Sat Oct 24, 2015 12:24 am

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by mouses »

Last year my federal taxes were about $1000. Under the new law, I would have paid about $2000, so I'll be paying about $1000 more in taxes a year.

The loss of the personal exemption plus the cap on some Sched A stuff is not offset enough by the tax bracket change.

My return is pretty simple. Single, senior, income is Social Security, IRA RMD, and some minor interest on taxable savings.

I see also that the new law will cause a 4% cut in Medicare and other cuts in things like funds for Meals on Wheels, triggered by the $1.5 trillion additional deficit it is expected to cause, due to some control spending bill passed a few years ago, so there are social costs from this bill as well.
User avatar
galawdawg
Posts: 5231
Joined: Thu Dec 14, 2017 11:59 am
Location: Georgia

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by galawdawg »

I'm likely to see a modest overall increase. Whether I itemize or take the standard deduction, my taxable income will rise with the loss of two exemptions.

I currently itemize about $19,000-$21,000 per year and with the bracket drop from 15% to 12% would save around $1,000 on federal taxes by taking the standard deduction. However, Georgia requires you take the same deduction type (standard-standard or itemized-itemized) on your state return as you take on your federal return. Since the Georgia standard deduction is only $3,000, I'd see a corresponding increase in my state income taxes (at a 6% rate) which would more than wipe out any federal reduction.

If I continue to itemize on my federal return, my federal tax will increase about $400 (loss of the two exemptions partially offset by bracket rate drop from 15% to 12%) while my state tax will remain about the same.
joeblow
Posts: 145
Joined: Sat Nov 28, 2015 11:17 am

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by joeblow »

According to the calculator, we'd save $9,500 to $13,000. Too bad we have to wait until 2019.
User avatar
munemaker
Posts: 4338
Joined: Sat Jan 18, 2014 5:14 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by munemaker »

I find it interesting what members consider meaningful.

There are multiple threads on how to save a few bucks on a tax program and complaints about paying $50 for a finance book, or how to read the WSJ free or on the cheap.

But saving hundreds to thousands to tens of thousands of dollars on taxes is not considered meaningful by most apparently.

Just an observation. Seems strange. Not sure what it means.

To me, anytime any bill goes down rather than up, that is a good thing.
Last edited by munemaker on Fri Dec 22, 2017 6:25 pm, edited 1 time in total.
Carl53
Posts: 2693
Joined: Sun Mar 07, 2010 7:26 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by Carl53 »

Compared to the projected 2018 tax info prior to this change, looks like we will save perhaps 21%, nearly $2500 if I take advantage of converting a few thousand extra and convert up to the top of the 12% bracket. It would be more if I don't do that. I am also now looking at reducing conversions (since without recharacterizations they are riskier) so as to be eligible for the retirement saver's credit. Going this route would drastically cut my taxes by two-thirds, but of course would reduce money going into the Roth by about 75%. For me it appears that the forgone conversions would have been taxed at about 18% when I consider the saver's credit along with altering the breakdown between Roth and TIRA contributions. This is probably not much different than had I done this before as I had previously considered it. The change in conversion recharacterization is what is making me consider this option more seriously.
truenorth418
Posts: 637
Joined: Wed Dec 19, 2012 6:38 am

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by truenorth418 »

My income won't change at all based on the new tax law. My income consists of dividends, capital gains, and a little interest from my investments, and the new tax law pretty left those types of income alone. Further, my itemized deductions and exemption totaled slightly more than $12,000 last year, so the changes to the deduction scheme won't have very much impact on me.
User avatar
LadyGeek
Site Admin
Posts: 95696
Joined: Sat Dec 20, 2008 4:34 pm
Location: Philadelphia
Contact:

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by LadyGeek »

I removed several off-topic posts. As a reminder, see: Politics and Religion
In order to avoid the inevitable frictions that arise from these topics, political or religious posts and comments are prohibited. The only exceptions to this rule are:
  • Common religious expressions such as sending your prayers to an ailing member.
  • Usage of factual and non-derogatory political labels when necessary to the discussion at hand.
  • Discussions about enacted laws or regulations that affect the individual investor. Note that discussions of proposed legislation are prohibited.
  • Proposed regulations that are directly related to investing may be discussed if and when they are published for public comments.
Examples of off-topic comments:

- opinions of politicians or a political party
- speculation on who is worse-off or better-off from the change in tax law, i.e. poor people, wealthy people
- future of Social Security
- speculation on impacts of the ACA mandate removal

Update:
- speculation on the budget deficit
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
evilityb
Posts: 238
Joined: Wed Jul 02, 2014 10:16 am
Location: The District of Columbia

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by evilityb »

The calculators show that I reduce my tax burden by between $1000-2000 next year. In 10 years when the provisions expire, I get hosed.
She/her | Make sure the fortune that you seek is the fortune that you need - Ben Harper
Topic Author
Ron Scott
Posts: 1090
Joined: Tue Apr 05, 2016 5:38 am

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by Ron Scott »

bsteiner wrote: Fri Dec 22, 2017 11:04 am The estate and gift tax exclusion amount and the GST exemption will be doubled for 2018 through 2025. High net worth taxpayers will be able to give an additional $5.6 million ($11.2 million) free of transfer tax while this window is open. While this won't affect very many taxpayers, it will provide a substantial benefit for those whom it affects.
This seems like it is worth the cost of admission for a lot of us in high tax states. Problem is its a hot potato and unless you're planning on saying goodbye in the next few years you really can't count on it since it could well be undone before you're gone. So you can't make it a real part of your planning. Annoying.
Retirement is a game best played by those prepared for more volatility in the future than has been seen in the past. The solution is not to predict investment losses but to prepare for them.
User avatar
munemaker
Posts: 4338
Joined: Sat Jan 18, 2014 5:14 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by munemaker »

evilityb wrote: Fri Dec 22, 2017 6:47 pm The calculators show that I reduce my tax burden by between $1000-2000 next year. In 10 years when the provisions expire, I get hosed.
Take the annual savings, invest it and you will be in a position to handle the increases in 10 years.
wander
Posts: 4424
Joined: Sat Oct 04, 2008 9:10 am

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by wander »

We will save $2-$3k a year in tax.
ge1
Posts: 816
Joined: Sat Apr 28, 2012 8:15 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by ge1 »

We save around 14k, I love it.
PFInterest
Posts: 2684
Joined: Sun Jan 08, 2017 11:25 am

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by PFInterest »

Meaningful? No.
tim1999
Posts: 4205
Joined: Tue Dec 16, 2008 6:16 am

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by tim1999 »

If the calculators are remotely accurate, my taxes will decrease a few thousand bucks per year.
GoldenFinch
Posts: 2728
Joined: Mon Nov 10, 2014 10:34 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by GoldenFinch »

I think we benefit because we have an S Corp. We will still itemize. I’m still trying to figure it out.
User avatar
corn18
Posts: 2867
Joined: Fri May 22, 2015 6:24 am

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by corn18 »

I just made a spreadsheet to do the calculations with the new tax law. Very, very straight forward for us. MFJ, no dependents, SALT, property tax and mortgage interest. It will be close between the std deduction and itemizing. Looks like we will save about $6k on $600k of W-2 income.
Consistently sets low goals and fails to achieve them.
boglesmind
Posts: 319
Joined: Sun Jan 05, 2014 12:07 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by boglesmind »

Ron Scott wrote: Fri Dec 22, 2017 10:20 am (Now that its signed I'm guessing we've got permission to talk outside one official thread...)

Anyway, I couldn't find a good calculator out there for year-to-year comparisons but it seems to me I'll benefit to the tune of some lunch money.

I'm losing $60k+ in SALT deductions and gaining in reduced rates, but I just retired this year with large 2017 income and I'm headed into the world of managed income, so I haven't done a good comparison between the current and 2018 tax plans.

How about you?
As posted in another thread the tax calculator is worse than useless for us. It showed we'd save about$2K :oops: Nope.

Our income is likely to be the same next year and according to Frugal Professor's spreadsheets which take into account qualified dividends, capital gains and AMT, we'd be paying $3K-$4K more. Thanks to elimination of personal exemptions and the cap on state income tax and property tax deduction. BTW, we are not subject to AMT in 2017 or 18.

Boglesmind
User avatar
saltycaper
Posts: 2650
Joined: Thu Apr 24, 2014 8:47 pm
Location: The Tower

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by saltycaper »

No meaningful change in 2018. Also, this thread is hilarious.
Quod vitae sectabor iter?
Determined
Posts: 422
Joined: Sat Aug 12, 2017 7:43 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by Determined »

I may get caught in a higher bracket because of head of household. My brother and inherited ownership of my parents' small business this year. Depending on profits in 2018, I could end up in the 32% bracket even though we wouldn't be necessarily receiving income. Most all the money we are taking out of the company this year are covering our taxes. The head of household and single rates are mostly the same now. It's an odd situation.
annielouise
Posts: 382
Joined: Wed May 14, 2008 4:11 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by annielouise »

munemaker wrote: Fri Dec 22, 2017 6:21 pm I find it interesting what members consider meaningful.

There are multiple threads on how to save a few bucks on a tax program and complaints about paying $50 for a finance book, or how to read the WSJ free or on the cheap.

But saving hundreds to thousands to tens of thousands of dollars on taxes is not considered meaningful by most apparently.

Just an observation. Seems strange. Not sure what it means.

To me, anytime any bill goes down rather than up, that is a good thing.
I think that some people are feeling that the cost out weighs the income change. For example, one may be able to increase income with a 2nd job, but the cost to family and sanity would make the increase in income a negative rather than a positive. So, while their income may be higher from the tax law, they may be more focused on (perceived) cost. I don't mean this to be political, but rather a way of seeing how others may be thinking/feeling. Finances are not just about numbers, although perhaps this board is only focused on the numbers and my comment will be removed. 😀
User avatar
obafgkm
Posts: 713
Joined: Fri Mar 11, 2016 8:12 am
Location: Pennsylvania

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by obafgkm »

My taxes are going up: in 2017 I'm a Qualifying Widow(er) (15% is my marginal income tax rate). In 2018 I will be Head of Household, and I anticipate my marginal income tax rate to be 22%.

My salary will not have substantially changed. I acknowledge that my taxes would have gone up anyhow, and they are lower under the new tax act.
"I'm investing in stocks... chicken, beef, and vegetable. It's risky, but I know one day it'll pay off & I'll be a bouillonaire. Who knows, I might even open up a Broth IRA."
hulburt1
Posts: 510
Joined: Tue Jul 15, 2014 9:17 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by hulburt1 »

[political comment deleted by admin alex]
Bacchus01
Posts: 3182
Joined: Mon Dec 24, 2012 8:35 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by Bacchus01 »

joeblow wrote: Fri Dec 22, 2017 6:10 pm According to the calculator, we'd save $9,500 to $13,000. Too bad we have to wait until 2019.
Why do you have to wait until 2019?
Mudpuppy
Posts: 7409
Joined: Sat Aug 27, 2011 2:26 am
Location: Sunny California

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by Mudpuppy »

student wrote: Fri Dec 22, 2017 1:28 pm
sevenseas wrote: Fri Dec 22, 2017 11:58 am I am in about the worst possible situation when it comes to the new bill: single, no kids, W2 employee, high state/local taxes, just bought a house (no mortgage, high property taxes) this year, county won't let me prepay next property tax installment, my marginal rate will go up, lose the employee home office deduction...I'm sure there is other stuff that I've missed! Doing my taxes in 2019 is gonna hurt...at this point I'm just trying not to think too much about it. Only bright spot: I opened a DAF last year so am going to use that to offload some appreciated shares that have been spitting out huge capital gains. Oh, and that it could have been even worse (i.e. original talk about limiting 401K contributions and charitable deductions...)
I can sympathize as a single, no kids, W2 employee.
To quote an old meme, there are literally dozens of us...

My income is more modest though, so I'll still be under the SALT limit even in California. My mortgage also is under the limit so I can still deduct that interest. Overall, my spreadsheet estimates I'll pay $1k less in taxes under the new plan than the existing rules.
dave_k
Posts: 406
Joined: Sat Dec 26, 2015 7:25 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by dave_k »

Without accounting for AMT, it looks like it should save us about $7500, or around 2.5% of our after tax income. I'd consider that meaningful. I'm not sure if that will be more or less with AMT though. I hope taxplancalculator.com incorporates it soon. I'm not sure if the page on how to adjust for AMT savings takes the phaseout changes into account, or that I'm following it correctly.

We're among the many people who will shift from itemizing to taking the standard deduction. I'm curious to see if the effective removal of the mortgage interest deduction for many home buyers (and property tax deduction, limited for some by AMT anyway) will enter into their decision making when buying a home, and have any affect on home prices in the range likely to be impacted most. It will make a difference of hundreds of dollars in the effective monthly cost for some people, a significant fraction of the total for the mortgage and property taxes.
MrJones
Posts: 775
Joined: Sat Mar 18, 2017 2:23 am

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by MrJones »

munemaker wrote: Fri Dec 22, 2017 6:21 pm I find it interesting what members consider meaningful.

There are multiple threads on how to save a few bucks on a tax program and complaints about paying $50 for a finance book, or how to read the WSJ free or on the cheap.

But saving hundreds to thousands to tens of thousands of dollars on taxes is not considered meaningful by most apparently.

Just an observation. Seems strange. Not sure what it means.

To me, anytime any bill goes down rather than up, that is a good thing.
Emphasis mine. It's never that simple. What if the bill went down but complexity went up? What if the bill went down in the short term but that means it will go higher up than it would have in the long term? What if the bill went down by little but the quality of services the bill was helping provide went way down? I'm not saying any of these happened or didn't happen with this bill, but I'm simply encouraging us to ask questions beyond whether the bill went down or not.
EddyB
Posts: 2431
Joined: Fri May 24, 2013 3:43 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by EddyB »

munemaker wrote: Fri Dec 22, 2017 6:21 pm I find it interesting what members consider meaningful.

There are multiple threads on how to save a few bucks on a tax program and complaints about paying $50 for a finance book, or how to read the WSJ free or on the cheap.

But saving hundreds to thousands to tens of thousands of dollars on taxes is not considered meaningful by most apparently.

Just an observation. Seems strange. Not sure what it means.
I thought the same thing.
munemaker wrote: Fri Dec 22, 2017 6:21 pm To me, anytime any bill goes down rather than up, that is a good thing.
All else being equal, I’d agree, but I suspect that isn’t the case.
lynneny
Posts: 231
Joined: Sun Apr 15, 2012 10:23 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by lynneny »

I'll be selling my home in 2018, so my biggest concern is how property values may be impacted. I live in a HCOL area, where itemizing high mortgage interest, SALT and property taxes is a big deal. I'm concerned my home will be worth less to buyers who can no longer recoup some of those costs in the form of tax deductions.
bigred77
Posts: 2049
Joined: Sat Jun 11, 2011 4:53 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by bigred77 »

Our household will see an increase in taxes by about 10%. We had heavy property tax, mortgage interest, and sales tax deductions under the old rules.

Nothing life changing but I’m not exactly thrilled about it. Once our new baby is born we’ll benefit from the tax credit and if we have a second child the new tax laws are basically a wash for our household. I’ll be sure to tell my wife we can’t afford to stop at just 1 :mrgreen:
IMO
Posts: 1569
Joined: Fri May 05, 2017 6:01 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by IMO »

catdude wrote: Fri Dec 22, 2017 12:20 pm No, not meaningful. I just have pension income and I figure I'll save about $600. Just enough to help out a bit with the cat food expense.
Hope that's for a cat and not you :D
User avatar
catdude
Posts: 1963
Joined: Mon Jul 16, 2007 8:11 pm
Location: Oregon

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by catdude »

IMO wrote: Sat Dec 23, 2017 12:51 am
catdude wrote: Fri Dec 22, 2017 12:20 pm No, not meaningful. I just have pension income and I figure I'll save about $600. Just enough to help out a bit with the cat food expense.
Hope that's for a cat and not you :D
Hee hee that's pretty good. :D I assure you it's not for me! I have four kitties (hence the name The Catdude) and the cat food expense can get to be quite high. But I think I'll be able to muddle thru....
catdude | | All generalizations are false, including this one.
Diogenes
Posts: 602
Joined: Sat Mar 03, 2012 2:58 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by Diogenes »

From the comments, it seems apparent that most will pay less in Federal income taxes next year, post- the Tax Cuts and Jobs Act. Good news!

I'm interested to see how the new brackets may impact the cost-benefit analysis of doing Roth conversions. Previously I-Orp showed it basically a wash to convert or not. I hope that changes so I can see a strong benefit to convert and pay the taxes now...
Not being an I-Orp expert, I wonder if it's possible to input the updated rates manually, or must we wait for an update?
BogleMelon
Posts: 3181
Joined: Mon Feb 01, 2016 10:49 am

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by BogleMelon »

I will save about $2200 per year. Going straight to our retirement accounts
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather
onourway
Posts: 3778
Joined: Thu Dec 08, 2016 2:39 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by onourway »

munemaker wrote: Fri Dec 22, 2017 6:21 pm I find it interesting what members consider meaningful.

There are multiple threads on how to save a few bucks on a tax program and complaints about paying $50 for a finance book, or how to read the WSJ free or on the cheap.

But saving hundreds to thousands to tens of thousands of dollars on taxes is not considered meaningful by most apparently.

Just an observation. Seems strange. Not sure what it means.

To me, anytime any bill goes down rather than up, that is a good thing.
Totally agreed. I've gone through long threads here where complex tax strategies have been under intense discussion - only to discover that we were talking about saving $50 or $100...
Traveler
Posts: 848
Joined: Fri Aug 30, 2013 9:07 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by Traveler »

My fed inc taxes should be reduced by $3000-3500. I'll take it but in reality it goes on the country's credit card bill so I have mixed feelings about.
User avatar
MedicatedMoney
Posts: 156
Joined: Mon May 28, 2007 11:22 am
Location: Philadelphia

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by MedicatedMoney »

Tax calculator has us saving $7400
Previous years itemized around $26k
Going forward will do the standard deduction
With 4 kids, the CTC is the main difference for us.
Most if not all that money will be pushed to our 529s
-Medicated
NYCguy
Posts: 377
Joined: Sun Nov 13, 2016 11:42 am

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by NYCguy »

As a high earner in New York City, my taxes will increase by $40,000. Under some versions of the bill my taxes were being increased by six figures.

I’m not looking for sympathy but in contrast one of my business partners living in another state with the same income will have a $61,000 tax savings. Go figure.
If your out-go is greater than your income, your upkeep will be your DOWNFALL.
walkindude
Posts: 160
Joined: Wed Nov 11, 2015 3:46 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by walkindude »

I'm self-employed and my wife is retired with a $20k pension (with COLA). No SS yet.

If I have a bad year (trying to in order to accomplish Roth conversions to the top of current 15% bracket), it looks like we'll get a $2100 reduction in Fed income tax, but an approximately $500 increase in MD income tax because the standard deduction for MD is only $4000. Net $1600. This is dwarfed by my annual SS contribution of about $10000, even in a bad year. That's the one I want to get down since I've already got 35 max years for SS.

This calculation does not include the pass-through benefit because I'm not sure how that will be handled yet. In a good year, the pass-through reduction should be a huge help.

We have itemized for 33 years, but not next year.

May think about Roth conversion into the 22% bracket at some point - especially if we move to a lower tax state.
forevernaive
Posts: 122
Joined: Tue May 20, 2014 3:46 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by forevernaive »

Would everyone expecting a decrease (or increase) in their 2018 Federal tax bill mind coming back in 2019 and tell us how it actually worked out for them?

We fall into that group of high-income working people that will likely see a significant increase in our tax bills. But we are not very sure of the dollar amount yet, despite our best efforts.

Personally, I don't expect that the taxcalculatorplan.com will prove very accurate, nor do I think Frugal Prof's spreadsheet is really all that much better. I asked my spouse, who is both a tax attorney and CPA, to take a look at them versus her own analyses. (Full disclosure: What motivated my doubt is that at least in our case, the current tax plan results on taxcalculatorplan.com were grossly inflated.)

Let's just say that for 2018 the analyses were substantially different, and her professional opinion is in the same direction TomatoTohmato's CPA suggested--of a significant increase to our federal tax liability. And in our case we live in a comparatively low income tax state and a moderate real-estate tax community, not high tax ones as TomatoTohmato disclosed.

I'd also like to ask everyone who does come back in 2019 to tell us how it affected their total state and local tax picture as well. One hidden wrinkle is that in many states and for many people a higher federal AGI will result in significantly higher state tax bills (e.g. see the comments on Frugal Prof's spreadsheet and https://www.denverpost.com/2017/12/20/f ... ate-taxes/). And that of course is at the same time the SALT deduction is being limited, so more people may find themselves limited by that than they would have expected given their past tax bills.

I don't doubt that there will significant savings to some people and increases to others. But I do doubt the accuracy of the predictions of these tax calculators as compared to what (yet to be updated tax software) or an informed CPA would predict.

And as to TomatoTomahto's last point, my spouse's professional opinion is that the reduction in the top marginal tax rates will really only benefit her highest net worth clients--who, incidentally, also stand to gain the most from the reduction in the corporate tax rate and the new pass-through rules. While I'd also echo his point about us being grateful for the financially secure position we are in, this tax bill is not so great for us as fortunate-indeed-but-still-working people.
TomatoTomahto wrote: Fri Dec 22, 2017 11:55 am
DaftInvestor wrote: Fri Dec 22, 2017 10:44 am
TomatoTomahto wrote: Fri Dec 22, 2017 10:36 am
DaftInvestor wrote: Fri Dec 22, 2017 10:29 am
Ron Scott wrote: Fri Dec 22, 2017 10:20 am Anyway, I couldn't find a good calculator out there for year-to-year comparisons but it seems to me I'll benefit to the tune of some lunch money.
Try this:
http://taxplancalculator.com/
Missing AMT and some corner cases - but if your taxes aren't too complex its a nice compare
I hope so. Our CPA estimated that we'd be paying more in taxes. The web site estimated we'd save $28k. I hope that the web site is right :D

Fwiw, we don't have mortgage interest, our charitable contributions are modest, and our deductions have been mostly property tax and state taxes. It is difficult to see how we don't get more hammered by the new law, but time will tell.
What reason did your CPA give for paying more? It likely depends upon how high your property tax and state taxes are whether or not the doubling of the standard deduction along with the marginal tax rate decreases will benefit you or not.
I wonder if this will impact populations in high-tax states in the coming years.
I'm tending to believe my CPA more than the web site.

Our property taxes are around $35k. Our state income tax for 2016 was a lowish six digit amount. Our income is expected to go up, and did in 2017.

I personally don't see how we could come out ahead just by the reduction in marginal tax rate. Mind you, I'm not complaining and am fully aware that we are very lucky. However, I don't see any way, short of becoming a pass-through (impossible, I think) that our taxes will go down.

Disclosure: we are considering changing state of residence, and the $28k included moving to another high, but not as high, tax state. In our current state, we are projected by the web site to save $6k.
User avatar
LadyGeek
Site Admin
Posts: 95696
Joined: Sat Dec 20, 2008 4:34 pm
Location: Philadelphia
Contact:

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by LadyGeek »

:!: This is a very important point:
forevernaive wrote: Sat Dec 23, 2017 9:12 am ...Personally, I don't expect that the taxcalculatorplan.com will prove very accurate, nor do I think Frugal Prof's spreadsheet is really all that much better. I asked my spouse, who is both a tax attorney and CPA, to take a look at them versus her own analyses. (Full disclosure: What motivated my doubt is that at least in our case, the current tax plan results on taxcalculatorplan.com were grossly inflated.)
Tax and investing analysis is your personal responsibility. Never trust a website (or any other source) unless it's been properly vetted.

Without further information, you don't know the underlying assumptions, accuracy, expertise, or anything else that goes into the calculations.

This is why I always request members to use information from credible sources (one that has been properly vetted and can trust).

FYI - Wikipedia is not a reliable source.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
Strayshot
Posts: 833
Joined: Thu Mar 05, 2015 7:04 am
Location: New Mexico

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by Strayshot »

Very very meaningful change for us. Elimination of the marriage penalty plus that wonderful and wide 24% bracket is amazing. Our itemized vs the new standard deduction is a wash if you exclude charitable giving, so I frontloaded a DAF for 5 years and will just take the standard deduction going forward and bunch dumping appreciated ltcg into the DAF in another 5 years. We live in a state with reasonable SALT so the cap is no biggie.

Yay tax law changes!!! :sharebeer
NorCalDad
Posts: 774
Joined: Sun Mar 25, 2012 11:14 pm
Location: Northern California

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by NorCalDad »

Absent itemizations, our 2018 comparison is fairly easy to calculate. We will no longer claim our mortgage/SALT deductions, but come out $1,800 ahead because of the lower tax brackets and we newly qualify for the child tax credit.
User avatar
munemaker
Posts: 4338
Joined: Sat Jan 18, 2014 5:14 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by munemaker »

Bacchus01 wrote: Fri Dec 22, 2017 10:19 pm
joeblow wrote: Fri Dec 22, 2017 6:10 pm According to the calculator, we'd save $9,500 to $13,000. Too bad we have to wait until 2019.
Why do you have to wait until 2019?
I think Bachus01 means that the law takes effect in 2018, the return will be filed in 2019 and that's when he/she will know.
Diogenes
Posts: 602
Joined: Sat Mar 03, 2012 2:58 pm

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by Diogenes »

Oh, I don't know. Both the taxcalculatorplan.com site, and that shown on Marketwatch, produced roughly the same amount of expected tax savings in my case. A new one at the NYTimes, https://www.nytimes.com/interactive/201 ... .html?_r=0
shows the same. Saving thousands of $$ is certainly meaningful. Why would it not be? The NYTimes article reports that 75 percent of filers will see a tax reduction with the new law.

Credible sources are certainly important, but this calculation for most of us is not rocket science. There may be some variation as the Tax Cuts and Jobs Act is implemented, however, I doubt there is any attempt to mislead in mainstream calculators.
minesweep
Posts: 1670
Joined: Fri Mar 02, 2007 8:17 pm
Location: 27,000 light years from the Galactic Center of the Milky Way Galaxy (the suburbs)

Re: Do you see a meaningful change in your income with new Tax Bill?

Post by minesweep »

minesweep wrote: Fri Dec 22, 2017 2:20 pm I expect my income in 2018 will be pretty much the same as 2017. I’m retired with pension (no COLA), social security, dividends, capital gains distributions, and RMD’s. I will benefit from the tax plan (didn’t take the time to estimate it just yet). But I will begin paying higher Medicare Part B & D premiums (to the tune of $3,618/yr in 2018) due to my RMD (IRMAA). So I don't yet know what my net result will be.

Taxable – 75%
TIRA – 22%
Roth IRA – 3%
Oops! Medicare premium for 2017 will be $1,608. The $3,618 (for 2018) includes that $1,608. The extra IRMAA for 2018 will be $2,010.

I estimate my 2018 federal income tax will be $1,950 lower. So in terms of dollars coming in and going out it will be pretty much a wash for me.
Time is your friend; impulse is your enemy - John Bogle | Learn every day, but especially from the experiences of others, it's cheaper! - John Bogle
Post Reply