[2018 tax return - How does it compare to previous years?]

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straws46
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Re: [2018 tax return - How does it compare to previous years?]

Post by straws46 » Wed Feb 13, 2019 10:28 am

The SALT limitation kept me from itemizing but my effective rate went down 2% due to the rate reductions. However, my state (like most?) doesn't permit itemization unless you itemized on the federal. That increased my state tax by about $1000. Looks like the new tax law is a windfall for states (unless everyone moves to Texas or Florida) if they don't change their tax laws to compensate for the federal changes.

markcoop
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Re: [2018 tax return - How does it compare to previous years?]

Post by markcoop » Wed Feb 13, 2019 10:44 am

One really important point comparing last year taxes to this years taxes - many of us had the smallest tax in years last year because we did things in preparation for the new tax laws - I opened a donor advised fund, paid Jan mortgage in December, paid 2019 real estate taxes in Dec. So, just looking at taxes paid or effective tax rate would not be accurate. I took a look at my last few years. It appears to me that I am paying less in taxes this year, but not enough of a difference to change anything in my life. I have mixed feeling overall about the tax changes [OT comments removed by admin LadyGeek].

I live in NY, own my home, AGI between $100K-$150K the past few years. I have 3 kids (2 in college, 1 in HS).

Some observations:
1) Taxes were too complicated. I would imagine many now take the standard deduction simplifying taxes drastically. Good.
2) In the past I deducted my property taxes, charity and mortgage interest. The new standard deduction is greater than I would've deducted. Good (at least for me).
3) Depending on the amount of property taxes, we are going to see widely different outcomes in high SALT states. Mixed.
4) It bothers me that incentives for charitable giving has been eliminated for many people. Bad.
5) [OT comments removed by admin LadyGeek]
Mark

foamypirate
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Re: [2018 tax return - How does it compare to previous years?]

Post by foamypirate » Wed Feb 13, 2019 11:07 am

Effective rate dropped 2.24% from 2017.

I paid roughly $1,800 less in taxes, on roughly $13,000 more taxable income (thank you, improved Child Tax Credits)!

Still received a tax refund, but it was small (intentionally), as I tracked my expected tax owed, and adjusted my W4 allowances throughout the year.

dknightd
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Re: [2018 tax return - How does it compare to previous years?]

Post by dknightd » Wed Feb 13, 2019 11:57 am

I'm concerned about how the new rules might impact charitable contributions.

jeremyi
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Re: [2018 tax return - How does it compare to previous years?]

Post by jeremyi » Wed Feb 13, 2019 12:04 pm

dknightd wrote:
Wed Feb 13, 2019 11:57 am
I'm concerned about how the new rules might impact charitable contributions.
I work in commercial banking (with a bit of non-profit) and every non-profit I (or anyone else around here) has spoken to has said that charitable giving is basically unaffected. I shared this same concern, but they noted a number of factors (I could share but it's not really on-topic here) and no impact.

DrGoogle2017
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Re: [2018 tax return - How does it compare to previous years?]

Post by DrGoogle2017 » Wed Feb 13, 2019 12:06 pm

thx1138 wrote:
Wed Feb 13, 2019 5:33 am
DrGoogle2017 wrote:
Tue Feb 12, 2019 11:00 pm
I made a last minute Roth Conversion on top of what I did last year, so my tax is higher. What’s surprised me is the state tax got higher too compare to previous year. I still have to find out why.
If your federal deduction went down due to SALT limit then typically your state taxes will go up because the state tax rates didn’t change. For a lot of folks even though their federal deduction went down the new tax rates and child tax credit mean their federal stayed close to the same as before or went down a bit despite their deduction going down. But in many states you just see the reduced deduction without anything to offset it. Some states are expecting increased revenue due to this and some are trying to modify their tax code to account for the change.
I did a quick look at the CA 540 form schedule A, and it seems like TT did give me full credit for the SALT deduction though.

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FiveK
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Re: [2018 tax return - How does it compare to previous years?]

Post by FiveK » Wed Feb 13, 2019 12:14 pm

straws46 wrote:
Wed Feb 13, 2019 10:28 am
However, my state (like most?) doesn't permit itemization unless you itemized on the federal.
State income tax laws are (so to speak) all over the map. See State Individual Income Tax Rates and Brackets for 2018 | Tax Foundation if interested.

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TierArtz
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Re: [2018 tax return - How does it compare to previous years?]

Post by TierArtz » Wed Feb 13, 2019 12:40 pm

My effective tax rate dropped from 18% to 7%. Last year I owed $5K in federal taxes and this year I'm getting $13k back. The big refund is only indirectly related to new tax laws. I added about four years of charitable giving to a new DAF late in the year and wished I'd have decreased withholding from my pension much earlier in the year. The SALT limitation only lops about $3k off of my reality and historical total deductions were approximately $40k. So, until the DAF needs replenished/law is changed,I'll take the $24k standard deduction vs about a $14k reality.

dknightd
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Re: [2018 tax return - How does it compare to previous years?]

Post by dknightd » Wed Feb 13, 2019 12:58 pm

jeremyi wrote:
Wed Feb 13, 2019 12:04 pm
dknightd wrote:
Wed Feb 13, 2019 11:57 am
I'm concerned about how the new rules might impact charitable contributions.
I work in commercial banking (with a bit of non-profit) and every non-profit I (or anyone else around here) has spoken to has said that charitable giving is basically unaffected. I shared this same concern, but they noted a number of factors (I could share but it's not really on-topic here) and no impact.
good. I can't deduct them any more, but will still do them. At least for now

mariezzz
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Re: [2018 tax return - How does it compare to previous years?]

Post by mariezzz » Wed Feb 13, 2019 1:05 pm

I figured out what my 2017 federal income tax owed would have been under the 2018 tax laws, and it increased by a fairly large percentage. This is due primarily to the loss of the personal exemption.

Additionally, had the 2018 tax laws been in effect in 2017, there would have been no advantage to me to itemize. When I itemized in 2017, the amount was larger than the 2017 allowed standard deduction, but a little under the 2018 allowed standard deduction.

(I'm not phrasing this statement in terms of 'money I had to pay' vs. 'refund I got back' when I filed my taxes. That's not an accurate way to talk about this.

The accurate way to talk about this is in terms of "total taxes owed" for the tax year (not how much you had withheld over the course of the year vs. how much you paid/got refunded upon filing taxes).

Since there is no advantage to me to itemize, there is no tax advantage for me of charitable giving. (I guess if I made many thousands more in charitable deductions to make it worthwhile for me to itemize, there would be some tax advantage, but financially, that is not an option for me. Additionally, it likely would lead to the IRS flagging me for an audit, which isn't worth it, either, even if I could produce all the necessary documentation to substantiate those charitable deductions.)

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TomatoTomahto
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Re: [2018 tax return - How does it compare to previous years?]

Post by TomatoTomahto » Wed Feb 13, 2019 2:21 pm

Deleted - numbers in error
Last edited by TomatoTomahto on Fri Feb 15, 2019 10:33 am, edited 1 time in total.
Okay, I get it; I won't be political or controversial. The Earth is flat.

FreedomHawk
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Re: [2018 tax return - How does it compare to previous years?]

Post by FreedomHawk » Wed Feb 13, 2019 3:47 pm

My Effective Tax Rate went down 4.3% from last year.

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LadyGeek
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Re: [2018 tax return - How does it compare to previous years?]

Post by LadyGeek » Wed Feb 13, 2019 4:08 pm

This is a "no politics" forum. I removed several off-topic posts criticizing the US tax system. 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.
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deskjockey
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Re: [2018 tax return - How does it compare to previous years?]

Post by deskjockey » Wed Feb 13, 2019 4:09 pm

Our income this year was up about 5% compared to last year, but we didn't have any major changes in our income picture. The impact of TCJA was quite positive for us:

We went from the 28% to the 24% bracket. This year we took the standard deduction while we itemized last year. Yes, the SALT cap did us in, but it worked out well in the end.

Our effective Federal tax rate went down from 19% last year to 15% this year.

Our taxes were down $6,600 or so, which was slightly offset by a $600 increase in our state tax liability since we had to take the puny state standard deduction. We're getting $220 of that back in October according to a newly-passed VA law.

We've been hit by the AMT since we had our second child, but not this year (or next, or the following one...). We still had to pay NIIT and the additional Medicare tax, but AMT was the big one for us.

We adjusted our W4s after the IRS changed its withholding tables, but overshot, so we're getting a refund this year for the first time in more than a decade. We've dialed them in better now.

Yes, the new forms are a goat rope, but I'll happily wipe away my tears of frustration with 66 Benjamins I wouldn't have otherwise.

gscook3
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Re: [2018 tax return - How does it compare to previous years?]

Post by gscook3 » Wed Feb 13, 2019 5:32 pm

Still waiting on a form or two to input, but if my 2018 return was complete, here's how it would stack up to 2017:

Total income decreased 1%, while total tax burden decreased 17%. We saw a decrease in effective tax rate of 4%.

Major contributors were:
- No longer subject to AMT
- Ability to take child tax credit (previously not income eligible)
- General bracket % reduction

Normchad
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Re: [2018 tax return - How does it compare to previous years?]

Post by Normchad » Wed Feb 13, 2019 8:06 pm

The tax changes were very good for us.

In 2017, we paid AMT, now that’s gone. The standard deduction is quite big now,so that helps. And the lower rates. So we definitely paid less.

I expect most people who itemize, won’t do that now. Partly due to the larger standard deduction and partly due to the SALT caps. I also think AMT has been eliminated for lots of folks.

goodenoughinvestor
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Re: [2018 tax return - How does it compare to previous years?]

Post by goodenoughinvestor » Wed Feb 13, 2019 8:42 pm

I will pay $1,000 more, or about 14%, in federal income tax, than I would have if the tax laws hadn't changed. This is due to a combination of the loss of personal exemption and SALT deduction.

rkhusky
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Re: [2018 tax return - How does it compare to previous years?]

Post by rkhusky » Thu Feb 14, 2019 7:07 am

retiredjg wrote:
Wed Feb 13, 2019 10:28 am
Agree the forms are ludicrous. More forms, many of which are largely blank. The whole "postcard" idea was a smoke a mirrors sham. I hope this gets fixed.
Be careful what you wish for. Perhaps the new Congress will pass a boatload of new tax legislation causing the IRS to fill the white space with more lines to fill.

MikeG62
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Re: [2018 tax return - How does it compare to previous years?]

Post by MikeG62 » Thu Feb 14, 2019 7:43 am

dknightd wrote:
Wed Feb 13, 2019 10:16 am
SimonJester wrote:
Wed Feb 13, 2019 10:04 am

I am trying a new feature this year for paying my balance, Electronic Funds Withdrawal with E-File. So instead of writing a check the IRS is going to zap my bank account for the funds. Lets see how that works out :shock:
I've been doing this the last few years. So far no problems. But I admit I'm still a little nervous. I would hate to have them mistakenly take out more money than I owe. I imagine that could be a real nightmare. But I plan to do it again this year . . .
I've done this (ACH to/from my checking account) every year that I owed money (and every year that I have gotten a refund) for as long as I can remember. Never had a problem. Note that I do the ACH with my checking account (not my savings or investment accounts).
Real Knowledge Comes Only From Experience

Rus In Urbe
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Re: [2018 tax return - How does it compare to previous years?]

Post by Rus In Urbe » Thu Feb 14, 2019 7:47 am

I haven't done final calculations, but we put $32K into our Donor Advised Fund this year. That helped.
I'd like to live as a poor man with lots of money. ~Pablo Picasso

MikeG62
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Re: [2018 tax return - How does it compare to previous years?]

Post by MikeG62 » Thu Feb 14, 2019 7:51 am

jeremyi wrote:
Wed Feb 13, 2019 12:04 pm
dknightd wrote:
Wed Feb 13, 2019 11:57 am
I'm concerned about how the new rules might impact charitable contributions.
I work in commercial banking (with a bit of non-profit) and every non-profit I (or anyone else around here) has spoken to has said that charitable giving is basically unaffected. I shared this same concern, but they noted a number of factors (I could share but it's not really on-topic here) and no impact.
This could be because most folks have not yet figured out how the new tax rules are affecting them. When I hear all this chatter about people concluding that since their "refund" is smaller they are paying more in tax I tend to think this could be more likely than not. The lack of knowledge about the changes in the tax law among the general population is scary.
Real Knowledge Comes Only From Experience

Userdc
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Re: [2018 tax return - How does it compare to previous years?]

Post by Userdc » Thu Feb 14, 2019 8:11 am

I model my taxes in Excel throughout the year to dial in my withholding, so I was able to run my 2018 taxes under the new law and the old laws. I can’t be 100% sure I did the old tax laws right, but my Excel calculation for the new laws matched my TurboTax numbers.

I was significantly impacted by the SALT limitation, so my tax burden is nearly identical under both regimes.

Of course if almost everyone else is paying less, and I’m paying the same, that feels an awful lot like a tax increase.

retiredjg
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Re: [2018 tax return - How does it compare to previous years?]

Post by retiredjg » Thu Feb 14, 2019 8:12 am

rkhusky wrote:
Thu Feb 14, 2019 7:07 am
retiredjg wrote:
Wed Feb 13, 2019 10:28 am
Agree the forms are ludicrous. More forms, many of which are largely blank. The whole "postcard" idea was a smoke a mirrors sham. I hope this gets fixed.
Be careful what you wish for. Perhaps the new Congress will pass a boatload of new tax legislation causing the IRS to fill the white space with more lines to fill.
Good point. Getting what one wishes for can have unintended consequences!

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leeks
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Re: [2018 tax return - How does it compare to previous years?]

Post by leeks » Thu Feb 14, 2019 8:40 am

2018 vs 2017
married filing jointly, only one spouse working, housing is rented
income in range of $300K, about 5% higher in 2018, almost entirely wage income

Fed tax paid went from 21% of AGI in 2017 to 16.5% in 2018.
NY state/city tax % paid is nearly unchanged.

Biggest changes for us:
  • no longer subject to AMT
  • able to take child tax credits (2 x 2,000) as phaseout raised to $400K income
  • took standard deduction this year, had itemized in past few years.

Tax changes likely saved us over $13K in 2018 compared to old rates.

Disclaimer: while we benefited substantially, this is not a statement in support of the most recent tax reform (nor of the previous tax policies). Political views aside, the tax system is still way too complex.
Last edited by leeks on Thu Feb 14, 2019 9:07 am, edited 1 time in total.

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galawdawg
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Re: [2018 tax return - How does it compare to previous years?]

Post by galawdawg » Thu Feb 14, 2019 8:46 am

My effective federal tax rate for 2018 would increase about .75% by taking itemized deductions and would be about the same if taking the standard deduction. My combination of itemized deductions and exemptions in 2017 was more than the 2018 standard deduction, so the loss of exemptions for me results in higher taxable income even with AGI remaining about the same.

However, because my state (Georgia) couples your federal deduction type to your state deduction type (if you take the federal standard deduction you must take the state standard deduction which is only $6,000 MFJ for 2018), my effective state tax rate for 2018 would increase approximately 50% if I took the standard deduction. By taking the itemized deductions on my state return, my state effective tax rate was about the same. So I'll be itemizing on both returns and seeing a modest increase in my total federal tax liability.

Had it not been for the loss of exemptions on my federal return, I would have seen a nice reduction in my federal income taxes. But as it stands for me, it was effectively a wash. No benefit and no significant downside.

Thorsbane
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Re: [2018 tax return - How does it compare to previous years?]

Post by Thorsbane » Thu Feb 14, 2019 8:59 am

MFJ, medium COL state/suburb, 1 child

2018 Effective Rate: 18.5%
2017 Effective Rate: 17.8%

I see people commenting on SALT deductions impacting CA & NY. We live in a medium COL state in a suburban area. I didn't realize real estate taxes are included in the SALT deduction and thought they were separate; our RE taxes are low compared to others. SALT deduction cap is hitting WAY more people than was mentioned when it was a news headline. We missed out on a couple thousand extra deduction.

Take_Five
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Re: [2018 tax return - How does it compare to previous years?]

Post by Take_Five » Thu Feb 14, 2019 1:55 pm

MFJ, SICK household (Single Income Coupla Kids - 3 to be precise), LCOL state (FL) - No state income tax, low property taxes, low interest mortgage (never could itemize)

~20% increase in AGI in 2018

2018 effective tax rate = 7.8%
2017 effective tax rate = 7.9%

The real comparison:
Hypothetical taxes in 2018 using previous tax code plus standard yearly increases = 10.4%. This equates to a few thousand dollars in tax savings for us.

We will take more of a hit next year as DS1 turns 17 and we lose $1500 of his tax credit. DS2 follows 2 years after that. By the time DS3 turns, there may be a new code...

Filed electronically last Thursday, return payment is currently pending in my account (7 day turnaround.)
Last edited by Take_Five on Thu Feb 14, 2019 2:19 pm, edited 1 time in total.

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StormShadow
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Re: [2018 tax return - How does it compare to previous years?]

Post by StormShadow » Thu Feb 14, 2019 2:00 pm

Changes to the Child Tax Credit household salary limit (from $110k to $400k) allowed me to get more in a refund this year. I know the personal exemptions disappeared, but our total refund did increase by about $2,000. :beer

madbrain
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Re: [2018 tax return - How does it compare to previous years?]

Post by madbrain » Thu Feb 14, 2019 3:55 pm

I'm still missing some 1099s from several brokers who are taking their time, so not able to get the full picture yet. But so far, Turbotax says our federal deductions have gone down from $49K in 201§7 to the standard deduction $24K in 2018. That part will not change. Total federal tax liability increased from $16K to over $32K - more than doubling !

At this time, the "federal review " in Turbotax shows lower income for 2018 than 2017, by about $12,000, due to the still missing 1099s.
However, the Turbotax "federal review" screen is very misleading, because it lumps both taxable and non-taxable income. For example, non-taxable retirement rollovers (1099-Rs) are included in the income total on that screen, even though they are not taxable and not part of AGI.

When looking at the 1040, as it stands now, our AGI did go up in 2018 vs 2017 by $26K, and it will go up some more when I finally receive the missing 1099s from brokerages, probably another $10K-$20K.

Also, we bought a plug-in car in 2017 but not in 2018, which affects tax credits as well.

I tried to create a mock return to compensate for those differences - assuming I bought a plug-in car again to get the same credit both years - and lowering the W-2 income to make it fairly close (within 1%), to see what the total tax difference would be.

I came up with the following. 2017 figures are from my actual return.
2017 AGI : $182,318
2017 deductions & exemptions : $48,962 . The bulk of this is SALT.
2017 taxable income : $133,356
2017 tax credits (form 1040, line 55) : $7,964 . This is the plug-in tax credit, and foreign tax credit.
2017 total tax (form 1040, line 63) : $16,237

And from the mock return :
2018 AGI : $183,569 . This is the artificially reduced income figure.
2018 deductions : $24,000 . Actual figure due to SALT deduction maxing at $10K.
2018 taxable income : $159,569
2018 tax credits (form 1040, line 12) : $7,500 . This is the mock plug-in tax credit, to keep the comparison even. I don't have the amount for the foreign tax credit yet due to missing 1099s, but it will probably be close to 2017 .
2018 total tax (form 1040, line 15) : $19,484

So, if our income had remained the same, and we had bought a plug-in car both years, tax reform would cost us $3,247 extra tax, or a 20% tax increase.

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happymob
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Re: Smaller tax refunds this year? Clear explanation please

Post by happymob » Thu Feb 14, 2019 7:07 pm

MikeG62 wrote:
Wed Feb 13, 2019 7:30 am
Not sure why so many people forgot about the increase in their take-home pay that occurred in Feb/Mar of 2018 when the withholding tables were updated?
I know we're unusual (not for Bogleheads, but in general) as we rarely review our bank account because we aren't living paycheck to paycheck. Maybe every 2 or 3 months. Even then, we don't notice when take home pay has changed. It's just, yeah, we got paid.

We did notice in January that my wife's take home didn't jump dramatically in her November and even more in December paychecks (when 403b contributions should have ceased due to hitting the annual limit in November), which led us to our ongoing saga with her HR to fix the over contribution
before April 15th (and get corrected W-2 as well).

But anything less than $100/paycheck, we won't notice. And even above that, we may not notice for months.

Sammyshanker
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Re: [2018 tax return - How does it compare to previous years?]

Post by Sammyshanker » Thu Feb 14, 2019 8:07 pm

I live in a high cost area of CA. Total itemized deductions were down from $40,000 in 2017 to $26,000 in 2018 mostly due to SALT limit.

My effective tax rate is lower in 2018 vs 2017 My taxable income increased by $15,000 in 2018, but my total taxes paid are $12,000 lower than 2017.

I am sure not paying AMT and receiving the child tax credit for which I was not eligible in 2017 played a role in the taxes paid difference.

Overall, I am please with the outcome.

hale2
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Re: [2018 tax return - How does it compare to previous years?]

Post by hale2 » Thu Feb 14, 2019 11:37 pm

Sammyshanker wrote:
Thu Feb 14, 2019 8:07 pm
I live in a high cost area of CA. Total itemized deductions were down from $40,000 in 2017 to $26,000 in 2018 mostly due to SALT limit.

My effective tax rate is lower in 2018 vs 2017 My taxable income increased by $15,000 in 2018, but my total taxes paid are $12,000 lower than 2017.

I am sure not paying AMT and receiving the child tax credit for which I was not eligible in 2017 played a role in the taxes paid difference.

Overall, I am please with the outcome.
Also in a high tax area. No child tax credit but also no longer losing my deductions to AMT. Income about $30k higher this year than 2017 but total tax burden is about the same. Very happy.

e5116
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Re: [2018 tax return - How does it compare to previous years?]

Post by e5116 » Thu Feb 14, 2019 11:57 pm

My total tax is about the same from 2017 to 2018 (adj for slight difference in income), but that's only because I had a second child this year. If I only had one child, I'd be paying slightly more. No children, even more.

Two income household each earning about the same in high tax state. My deductions in 2017 totaled around $45k (I did prepay half year of prop tax) but I only got $25k this year. Lost the exemptions too of course although got the child tax credit. So, while my AGI was about the same year over year, my taxable income had a pretty substantial increase this year. I've only owned a house for three years so didn't get many years of subsidized property taxes...bummer.

If pay continues to rise, then new tax law will probably benefit me a bit as AMT would have kicked in with old laws (I was kind of on the cusp).

Furthermore, the new withholdings were woefully under for me. I had to manually add about $1000/month after I ran the IRS calculator last May. And more to state too. Glad I did or I'd be owing a lot of money right now....as it is, I'm getting basically no refund although a decent one at state level after my 529 contributions kicked in. So, if I wasn't a home owner, I probably would have come out ahead but because I am in a high tax state with two about equal earners, it was about a wash in total tax burden.

BogleWogle
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Re: [2018 tax return - How does it compare to previous years?]

Post by BogleWogle » Fri Feb 15, 2019 12:01 am

Fed Tax rate 2018: 17.5%
Fed Tax rate 2017: 17.1%

Single filer, no state tax. No longer itemizing with just a bit under $12K in deductions. Attribute higher tax rate primarily due to increased income. First year I owe the IRS, but tied to converting an IRA so I could backdoor Roth IRA contributions.

Nothing to complain about.

phxjcc
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Re: [2018 tax return - How does it compare to previous years?]

Post by phxjcc » Fri Feb 15, 2019 1:24 am

Income up 5,000 due to interest rate increases.

Combined fed and state (ca) refund is $600 greater.

Effective fed tax rate 2% lower.

SALT and other schedule A changes cost me.

Carl53
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Re: [2018 tax return - How does it compare to previous years?]

Post by Carl53 » Fri Feb 15, 2019 5:00 am

Income up 2.4% from 2017.
Taxes down 14.3% despite bunching deductions in 2017 and itemizing while taking standard deduction in 2018.
Effective tax rate now 8.67% vs 10.37% in 2017.
Owed about $455 this year vs $80 refund in 2017. Just bumped up withholding from pension by $60/month.

acegolfer
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Re: [2018 tax return - How does it compare to previous years?]

Post by acegolfer » Fri Feb 15, 2019 8:44 am

No change in income
Fed tax (not refund) decreased by 30%

Barsoom
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Re: [2018 tax return - How does it compare to previous years?]

Post by Barsoom » Fri Feb 15, 2019 9:06 am

My 2018 W-2 income is 10.3% higher than my 2017 W-2 income. My 2018 W-2 federal income tax withheld is 1.5% lower than my 2017 W-2 federal income tax withheld.

I haven't done my 1040, so I don't know what my true taxes owed are yet.

However, in December I elected to take a dividend in cash instead of reinvesting, so I have an unplanned untaxed lump sum that I received at the end of last year that will add to my ordinary income.

-B

NoProbLlama
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Re: [2018 tax return - How does it compare to previous years?]

Post by NoProbLlama » Fri Feb 15, 2019 11:36 am

Effective FIT rate by year:

2013: 11.54%
2014: 12.27%
2015: 12.00%
2016: 14.40%
2017: 15.72%
2018: 13.12%

In 2016 & 2017 we redirected a good chunk of savings from Traditional 401k to cash for a house downpayment. House was purchased late 2017, and property taxes on it pushed us above the SALT 10k limit in 2018. Gross income also doubled over that period with steady career progression common for the profession.

MnD
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Re: [2018 tax return - How does it compare to previous years?]

Post by MnD » Fri Feb 15, 2019 5:20 pm

Very positive for us as we have no other dependants - kids are out of the house, lower-upper class income and low deductions (no mortgage, low property taxes and medium-low flat state income tax rate). In fact for 2017 we couldn't even get to the $12K itemized threshold and took the standard deduction.

For 2018 versus 2017, on an AGI up 5%, our effective federal tax rate went from 18.2% to 15.5% :shock:
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You Know What I Mean
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Re: [2018 tax return - How does it compare to previous years?]

Post by You Know What I Mean » Fri Feb 15, 2019 8:23 pm

Extremely pleased with the results, which were as expected based on estimated reductions. Even though 2018 Total Income was $4,456 higher than 2017, the total tax bill was $2,187 lower. Effective 2018 tax rate was 7.93%, which was 2.57% lower than the 10.50% in 2017. Married Filing Jointly, standard deduction, no dependents.

sawdust60
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Re: [2018 tax return - How does it compare to previous years?]

Post by sawdust60 » Sat Feb 16, 2019 12:40 am

This is how I viewed the tax savings, with income and Roth conversions to the top of the 12% bracket, MFJ and 65+ standard deduction. The 2017 column uses same income and tax brackets, but applies higher rates. For 2018, more deductions and lower tax rates. Results are what I expected.

Image

thx1138
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Re: [2018 tax return - How does it compare to previous years?]

Post by thx1138 » Sat Feb 16, 2019 9:38 am

Finished today after waiting for the last 1099 to come.

AGI up by $5000 and taxes down by $300. We lost a lot of deduction to SALT limit and ended up using the new higher standard deduction this year. The loss of deduction was more than offset by the change in tax rates and now being eligible for the child tax credit. Without the kid our tax owed and effective tax rate would have gone up slightly. With the kid it goes down a bit.

As to the refund I abhor refunds but did adjust withholding this year with all the changes and ended up with a small refund of around $300. Not sure if I'll bother adjusting again so we owe money next year instead.

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Re: [2018 tax return - How does it compare to previous years?]

Post by LadyGeek » Sat Feb 16, 2019 4:27 pm

My numbers are in:

2017 return: $2,000 refund
2018 return: $670 due

Why? 2018 was the first full year my husband got full Social Security. I also started a company pension. In both cases, I didn't adjust my withholding. I knew I was going to be below the underpayment penalty, so it wasn't critical to get this nailed down. In hindsight, that may not have been the best move.

How much did I actually pay in taxes compared to last year? About $2,000 less.

========================
For 2019, I've adjusted my withholdings using the IRS Withholding Calculator to properly account for my situation (W-2, pension, Social Security).

Tip: Each income stream is a "job" as defined by the calculator. See: Retirees: Avoid a surprise tax bill; get enough tax taken out of pension payments; IRS Withholding Calculator can help

I entered Social Security as 85% of actual Social Security income, as that's the taxable amount. (Based on tax software calculations, background is in the wiki: Taxation of Social Security benefits)
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munemaker
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Re: [2018 tax return - How does it compare to previous years?]

Post by munemaker » Sun Feb 17, 2019 5:39 pm

The anecdotal evidence and circumstances are interesting.

Here's a related quote from todays WaPo:
"When the joint Committee on Taxation and The Tax Policy Center looked at the impact of the tax bill, they concluded that in 2018, most people would see an overall reduction in taxes. The Tax Policy Center found that 80.4 percent of all taxpayers would get a tax cut, compared with about 5 percent experiencing tax increase.

In the middle quintile, 91 percent would get a tax cut, averaging about $1,090, with 7.3 percent facing a tax increase averaging about $910."
I found these statistic interesting, so I am sharing them.

ohai
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Re: [2018 tax return - How does it compare to previous years?]

Post by ohai » Sun Feb 17, 2019 6:04 pm

I filed as married joint in New York City, which possibly has the highest state and local taxes in the country. For various reasons, we declared just over $1 million in income for 2018, which was incrementally higher than 2017. Despite this, and the loss of SALT deduction, our taxes were a few thousand dollars lower than the previous year's. The primary reason was that two income households were penalized heavily in the old regime. In this regard, the new tax law makes more sense. Why penalize people for being married? On principle, I also agree with eliminating or capping SALT deductions, even though this deduction would obviously benefit me significantly. There should be no reason for the Federal government to subsidize high spending decisions on a local level. I also don't own any real estate - if I did, the cut in property tax deduction would have increased my tax bill.

On the downside, tax withholding schedules for 2018 ended up being much less aggressive than prior years. So, I owe the IRS about $90k in taxes by April. That isn't so good...

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Re: [2018 tax return - How does it compare to previous years?]

Post by StoopieHippo » Sun Feb 17, 2019 6:04 pm

We weren't able to itemize either this year, but our effective tax rate went down from 22% last year to 17% this year. That being said, we also made about $20k less this year but the better quality of life we gained with that loss was tremendous. Our return was gigantic this year also, mostly due to the job switch in the middle of this year and the extra social security payments being refunded to us.

jtdavid
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Re: [2018 tax return - How does it compare to previous years?]

Post by jtdavid » Sun Feb 17, 2019 6:18 pm

Total household income up by about 1% from 2017 to 2018. Overall effective tax rate (excluding FICA) declined from 28.8% to 24.1%. This is despite running into the $10k SALT deduction limit.

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Re: [2018 tax return - How does it compare to previous years?]

Post by TomatoTomahto » Mon Feb 18, 2019 6:45 am

In 2018, we moved from NJ to MA, for my wife to take a new job. If we were “planning” this well, we should have moved in 2017.

Moving costs were no longer deductible. New employer grossed it up, but there is still a price to pay.
We ended up owning two homes for the majority of the year, with property taxes of around $75k. SALT limit hit us.
I’m not sure, but various RE taxes on sale might have been deductible but no longer are. SALT limit probably hit us again.
We had to reregister cars and pay excise taxes, maybe another $2k. SALT limit hit us again.
Had to install a new Electric Vehicle charger. No longer can get 30% tax credit.

So, tax wise, ooops. Did I mention that we love Massachusetts? Best move ever, just at least a few months late. :D

It’s difficult to calculate accurately, but like for like (adjusting for one off extraordinary capital gains), back of envelope, our effective tax rate went up a percent or two.
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Re: [2018 tax return - How does it compare to previous years?]

Post by MikeG62 » Mon Feb 18, 2019 7:14 am

sawdust60 wrote:
Sat Feb 16, 2019 12:40 am
This is how I viewed the tax savings, with income and Roth conversions to the top of the 12% bracket, MFJ and 65+ standard deduction. The 2017 column uses same income and tax brackets, but applies higher rates. For 2018, more deductions and lower tax rates. Results are what I expected.

Image
Great summary sawdust. This is the right way to do the analysis.

Quick calculation indicates breakevern point in your summary would be had you had $30K in itemized deductions in 2017 (not unreasoanble if living in a HCOL area (i.e., high property taxes), paying your own health insurance and associated OOP’s (e.g., retired before being medicare eligible), plus state income taxes and some charitable - would not even necessarily need mortgage interest to get there).
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