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

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fru-gal
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Re: How did you feel about your 2018 tax returns?

Post by fru-gal » Mon Apr 22, 2019 2:21 pm

prd1982 wrote:
Mon Apr 22, 2019 2:14 pm

Perhaps the most bothersome is that the redesign of the FORM had nothing to do with making the forms easier to use or implementing policy. I believe the forms were redesigned solely for political reasons. When it comes to taxes, we should be praising / condemning congress and the pres; the IRS should be be tasked with implementing the forms in the best possible way.
Yes, that was apparent. How stupid. I also use last year's tax forms as a sanity check.

I'm retired and live on Social Security and my savings. I wound up paying several thousands more due primarily to Schedule A changes. Too bad I'm not one of the 1%.

Loon11
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Re: How did you feel about your 2018 tax returns?

Post by Loon11 » Mon Apr 22, 2019 2:24 pm

Didn't realize how much we made in interest and dividends and thus got back less. New to retirement and the pension and large AL payout at retirement upped my income considerably. However, our effective rate according to Turbo was 12.9%. Our turbo tax return was 66 pages for federal and 30+ for State. My spouse wants us to let an accountant do it but I am sure I would do just as much work getting it ready, explaining everything and gathering up all the paperwork. Plus would cost a lot more than the $56 for Premier.

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Re: How did you feel about your 2018 tax returns?

Post by Christine_NM » Mon Apr 22, 2019 2:30 pm

My total tax was twice that of 2017 on the same adj gross income. Part of that is my itemized deductions were a lower amount, and the rest was due to losing the $4050 personal exemption. Went from 24% to 22% rate.

Not a big deal, 2017 was an exceptionally low tax year for me. But still, does not bode well for future years. For 2019 tax year I'll take the standard deduction and save up to bunch two years' of charitable contributions in 2020 (that will be something like 150k-200k and should carryover to max out 2021 deduction also).

Bad news, I'm running out of capital loss carryover. Still have 24k for next year but I've been spoiled by TLH. Have no losses to take now.

I have no opinion on the forms. If my CPA wants me to have an opinion she will give it to me. :D
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Re: How did you feel about your 2018 tax returns?

Post by jaxxmjd » Mon Apr 22, 2019 2:32 pm

The process took a bit longer as the new format took a bit of time to fully understand, but having invested that time, I agree with the changes that were made to the format (although there's probably still room for improvement). Without the bias of familiarity of the prior system, I think most people would see the newer format as more intuitive.

Financially, the result was about breaking even. My federal tax liability certainly decreased, but my state increased nearly as much to offset the gain. My state requires a filer to use the state standard deduction (capped at a fairly low amount) if they've claimed the standard deduction on their federal returns, so my state deduction amount dropped significantly (talking about 5 digits here), thus raising my state liability. I'm certain that our legislature was aware that this would be the result for most people but chose not to act as doing so effectively provided the state with increased revenues without having to be the bad guys who raised the tax rates.

Overall, I'm happy that the tax changes are helping a lot of small businesses and that most peoples' liabilities decreased.

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Re: How did you feel about your 2018 tax returns?

Post by Gill » Mon Apr 22, 2019 2:39 pm

Agree with those who liked and benefitted from the new tax provisions but hated the forms. Found them unnecessarily confusing and difficult to work with after having used the old forms for many years.
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Re: How did you feel about your 2018 tax returns?

Post by il0kin » Mon Apr 22, 2019 2:43 pm

There were two things that impacted us:

1. The child credit increase. This is a step in the right direction to helping offset the very high cost of child care.

2. I tuned the per-paycheck changes to be absorbed by an increase in retirement contributions last year, so I never noticed the extra money in the first place.

Standard deduction was much easier than itemizing to try and get an extra $5000 in deductions. I really liked this change!

I’ll refrain from commenting on the policy itself as I think that is out of bounds here.

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Re: How did you feel about your 2018 tax returns?

Post by GoldenFinch » Mon Apr 22, 2019 2:44 pm

vitaflo wrote:
Mon Apr 22, 2019 12:00 pm
Creditcardguy wrote:
Mon Apr 22, 2019 11:47 am
As a small business owner, my taxes went down substantially. I was happy, happy, happy. :D
Same. The QBI deduction is ridiculous.
Same with us: S - Corp made 43k more than the last year and we paid 1k less in taxes. I had no idea what to expect, so that was a surprise.

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Re: How did you feel about your 2018 tax returns?

Post by CascadiaSoonish » Mon Apr 22, 2019 2:44 pm

Hard to make a direct comparison to prior years since our small business income goes up and down. Our tax liability jumped significantly more than our AGI, which to an extent was to be expected in a higher income year. And even with our CPA doing all the work it did take me longer to read and understand all the new forms when verifying the return. It certainly didn't get simpler this year.

My sense is that we did see a slight reduction in tax liability overall but it wasn't much & came with more confusion with the changes in the forms and tax code. But I don't mind too much, I'm one of those who thinks the tax liability is too low at our income level anyway. I'd rather see higher taxes for better funding of public services.

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Re: How did you feel about your 2018 tax returns?

Post by grabiner » Mon Apr 22, 2019 2:48 pm

il0kin wrote:
Mon Apr 22, 2019 2:43 pm
There were two things that impacted us:

1. The child credit increase. This is a step in the right direction to helping offset the very high cost of child care.
Unless you became newly eligible (over the old limit but under the new one), this was a wash; the old credit plus the (now-gone) personal exemption for a child were about the same value. If you were in the 25% tax bracket in 2017, you got a $1000 child tax credit, and $1013 in lower tax from the $4050 exemption; now, you get a $2000 credit, and lose the $913 tax reduction from what would have been a $4150 exemption in the 22% bracket.
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Re: How did you feel about your 2018 tax returns?

Post by White Coat Investor » Mon Apr 22, 2019 2:53 pm

boglechu wrote:
Mon Apr 22, 2019 11:35 am
I thought it was simpler than last year’s taxes in the sense that my main deductions were mortgage interest, child tax credit, and $10,000 for state and local taxes. I did lose out on deducting all of my state and local taxes.
I'm sure my taxes were lower than they would have been under the old set of laws, but they were higher than the previous year so in that sense, I didn't like it at all. Simpler? Not when they split the 1040 like Voldemort's soul.

My largest deductions were the 199A deduction, retirement account contributions, health insurance, and HSA contribution. I had a small home office deduction and a foreign tax credit and that was about it. For 2019, I'll itemize again and have a very large charitable contribution deduction, maybe almost as large as my 199A.
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Re: How did you feel about your 2018 tax returns?

Post by White Coat Investor » Mon Apr 22, 2019 2:54 pm

vitaflo wrote:
Mon Apr 22, 2019 12:00 pm
Creditcardguy wrote:
Mon Apr 22, 2019 11:47 am
As a small business owner, my taxes went down substantially. I was happy, happy, happy. :D
Same. The QBI deduction is ridiculous.
Unless your work is a specified service.
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Re: How did you feel about your 2018 tax returns?

Post by yousha » Mon Apr 22, 2019 3:03 pm

Surprisingly very well!
Last edited by yousha on Sun Jun 02, 2019 7:24 am, edited 1 time in total.

Hulu
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Re: How did you feel about your 2018 tax returns?

Post by Hulu » Mon Apr 22, 2019 3:09 pm

The past few years I've felt that I should use something other than big tax software. Our taxes should be done automatically for us. We have better things to do!

reimann
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Re: How did you feel about your 2018 tax returns?

Post by reimann » Mon Apr 22, 2019 3:14 pm

My accountant did the taxes. Cost was $385.
My overall tax rate was 26% vs 30% 2018 on slightly lower income so I saved a lot. My SALT taxes are not very high so the standard deduction was quite helpful for me.

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Re: How did you feel about your 2018 tax returns?

Post by Glockenspiel » Mon Apr 22, 2019 3:15 pm

Zero difference in complexity for me. If anything, they got more complex simply because my wife started an LLC. I was happy with our refund, but think my tax liability was laughably small for our income. We had only 105k in AGI due to my wife taking 8 months of maternity leave, and our effective federal tax rate was only 5.1%. The $2,000 per child tax credit made a huge difference on our tax liability. So we were in the 22% marginal bracket but ended up with 5.1% federal tax liability. I wish more people (the general public) understood the difference between marginal tax bracket and effective tax rate.
Last edited by Glockenspiel on Tue Apr 23, 2019 1:46 pm, edited 3 times in total.

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Re: How did you feel about your 2018 tax returns?

Post by jhfenton » Mon Apr 22, 2019 3:18 pm

Tamarind wrote:
Mon Apr 22, 2019 1:52 pm
Between getting married and higher standard deduction, my taxes dropped a LOT. I think our effective rate was something absurd like 9% of actual gross income even though marginal rate was 22%. I'm tempted to say too low.

The experience of doing them was about the same as usual, except that I couldn't file as early as I usually do because FFF too longer to support all the new forms. I did overwithhold by about $2k despite tuning withholding twice during the year.
We were in roughly the same ballpark: 22% bracket, roughly 8% effective tax rate, about 4% lower than last year. So we saw a big savings.

Why? Our mortgage is modest (five figures) and our state and local taxes were barely $10K combined in 2017. So we didn't gain that much from itemizing. The increased standard deduction was almost entirely gravy for us.

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Re: How did you feel about your 2018 tax returns?

Post by Thesaints » Mon Apr 22, 2019 3:29 pm

boglechu wrote:
Mon Apr 22, 2019 11:35 am
How did you feel about your 2018 tax returns?
Mixed feeling:

- It is not any "simpler", just a bit different, which is a PITA since one cannot fully rely on past filings. However, this effect will not be there next year.

- Our marginal rate on fully taxable financial income (i.e. interests, STCG and the likes) is close to 50%.

- On the positive side, we pay substantially less by staying married than we would by filing as individuals. This is by far the biggest change introduced by the new legislation.

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Re: How did you feel about your 2018 tax returns?

Post by vitaflo » Mon Apr 22, 2019 3:36 pm

White Coat Investor wrote:
Mon Apr 22, 2019 2:54 pm
vitaflo wrote:
Mon Apr 22, 2019 12:00 pm
Creditcardguy wrote:
Mon Apr 22, 2019 11:47 am
As a small business owner, my taxes went down substantially. I was happy, happy, happy. :D
Same. The QBI deduction is ridiculous.
Unless your work is a specified service.
Even if you're a specified service, your income has to be above $315,000 (joint) for there to be a phase out. If you make less than $315k, you'll get the full deduction, specified service or not.

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Re: How did you feel about your 2018 tax returns?

Post by TheOscarGuy » Mon Apr 22, 2019 3:45 pm

boglechu wrote:
Mon Apr 22, 2019 11:35 am
I thought it was simpler than last year’s taxes in the sense that my main deductions were mortgage interest, child tax credit, and $10,000 for state and local taxes. I did lose out on deducting all of my state and local taxes.
Complexity about the same for salaried, married individual.

prd1982
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Re: How did you feel about your 2018 tax returns?

Post by prd1982 » Mon Apr 22, 2019 3:51 pm

In thinking about this, I realized I spent the most time dealing with QCDs from my IRA:

* Had to write a letter to my FI listing the amounts and names on the checks.
* The FI required a medallion guarantee, which I had to get from my credit union.
* When the checks arrived, I had to mail them to the charities along with a note asking for a letter saying we made the contribution and got nothing in return.
* Then I had to track that I got the letters from the charities.
* Later in the year we decided to do one more contribution, and had to repeat the above process.
* The new check never arrived, so had to contact the FI for a new check. Surprisingly, this turned out to be very simple and handled over the phone.

Of course for the 1040, it was a simple 1-line entry. But there was a lot of paperwork. It pays to do this early in the year (I do them in May). Gives time to request duplicates if there are problems. And the charities like the money in May as much as Dec!

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dodecahedron
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Re: How did you feel about your 2018 tax returns?

Post by dodecahedron » Mon Apr 22, 2019 4:11 pm

NYS changed their tax laws to ¨decouple¨ our state tax laws from TCJA changes at federal level. Also NY now allows taxpayers to itemize on state return even if they elected standard deduction at federal level.

So complexity only increased for me this year due to discrepancies between federal and state.

Bottom line is that under current federal/NYS laws, I will be itemizing--at least on my state return--every year for the rest of my life. My real estate taxes alone exceed the NYS standard deduction of $8K for a single filer.

Once I hit 70 1/2, in five years, I will likely stop itemizing on federal as my charitable donations will primarily be done through QCDs.

As it worked out for 2018, I wound up itemizing for both federal and state due to large charitable and medical deductions combined with substantial real estate taxes.

Some interesting tax angles involving the discrepancy between federal and state this year. My state itemized deductions were slightly higher than my federal itemized deductions for the first time ever. (In the past, my state itemized deductions were always lower than federal, due to fact that state disallows deduction of income/sales taxes.)

NYS is allowing me to deduct full amount of my real estate taxes, no SALT cap at state level.

For charitable, I bumped into the federal 30% of AGI limit for donations of appreciated securities and wound up with a federal charitable carryover of the excess, but NYS allowed me to deduct the entire amount of my charitable donation of appreciated securities. (NYS has an overall limit of 50% of AGI on any type of charitable donation vs. 60% of AGI for federal, but I did not come any where close to either of those caps.)

For medical, I expect 2018 will be my last year of itemizing medical deductions (at least until such future time as I may need LTC.) I transitioned from a high deductible medical ACA bronze policy to a zero premium Medicare Advantge plan with modest copays late last year. It was a major pain to compile all my supporting cancelled checks, credit card receipts, invoices, etc. for my medical deductions this year, but I am hopeful that my tax filing will be much simple going forward. However, I do plan to begin reimbursing medical expenses from my HSA starting this year, so I will still need to organize and keep those receipts.

Lots of carryforwards this year. Capital loss still carrying forward from the past and will continue forward. Solar credit carryforward from the past and will continue forward. Excess appreciated charitable donations from this year will carryforward. My last year of dealing with ACA premium tax credit renconciliation, but had to do a shared allocation with adult daughter for the first (and last) time.

All in all, this turned out to be my most complicated tax return of my life, but new federal tax law did not change much for me (other than lowering the rates and capping SALT.)

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

Post by LadyGeek » Mon Apr 22, 2019 4:40 pm

I merged boglechu's thread into the on-going discussion.

I also removed some off-topic posts. This is a "no politics" forum. As a reminder, see: Politics and Religion
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Please stay on-topic, which is your own situation.
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gluskap
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Re: [2018 tax return - How does it compare to previous years?]

Post by gluskap » Mon Apr 22, 2019 4:47 pm

My taxes went up. First time I've owed money ever. Even though I ended up taking the standard deduction, it wasn't much easier as I still had to input all that info anyways. Thinking I need to start my own real estate business to really take advantage of the change in tax laws.

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dodecahedron
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Re: How did you feel about your 2018 tax returns?

Post by dodecahedron » Mon Apr 22, 2019 4:54 pm

prd1982 wrote:
Mon Apr 22, 2019 3:51 pm
In thinking about this, I realized I spent the most time dealing with QCDs from my IRA:

* Had to write a letter to my FI listing the amounts and names on the checks.
* The FI required a medallion guarantee, which I had to get from my credit union.
* When the checks arrived, I had to mail them to the charities along with a note asking for a letter saying we made the contribution and got nothing in return.
* Then I had to track that I got the letters from the charities.
* Later in the year we decided to do one more contribution, and had to repeat the above process.
* The new check never arrived, so had to contact the FI for a new check. Surprisingly, this turned out to be very simple and handled over the phone.

Of course for the 1040, it was a simple 1-line entry. But there was a lot of paperwork. It pays to do this early in the year (I do them in May). Gives time to request duplicates if there are problems. And the charities like the money in May as much as Dec!
This seems like quite a tedious process, particularly the medallion guarantee. When I get to that point in my life, I plan to make it easier on myself by using an IRA custodian that will allow me to simply write checks to my chosen charities on a money market fund within my IRA.

In any case, I do agree it is best to do this relatively early in the year to allow for things to go wrong, especially with getting letters of acknowledgement from charities that use the correct language.

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

Post by scrabbler1 » Mon Apr 22, 2019 5:05 pm

If you don't like what they did to the forms, as in all those extra schedules (1-6) from dicing up the old 1040 form and eliminating the old short forms (1040A, 1040EZ), then let Nina Olson of the Taxpayer Advocate know. I wrote her last month and she was glad to hear my complaints.

Her email address is nina.e.olson@irs.gov .

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

Post by CT-Scott » Mon Apr 22, 2019 7:14 pm

I've commented on my situation already, but wanted to add a couple of thoughts...

I was disappointed to "lose out" on itemizing my deductions. Over the last several years, I've learned a lot about filing taxes. A few years back I was using a couple of "tax professionals" where I'd get all of my stuff organized and even did a "rough draft" of my taxes myself, before giving it to them. Inevitably, I'd find that they screwed something up and I had to inform of that, and have things fixed. I finally convinced my wife to let me do our taxes myself. I enjoyed learning about the various things that I could take advantage of to maximize our tax savings, and itemizing was a big part of that. Unfortunately, our situation was such that we got hit with AMT. We live in a high-SALT state (CT), but our house is not particularly expensive. We used to itemize, but lost our property taxes due to AMT.

Some have stated that they have concerns about charitable giving going down due to the shift where it won't be advantageous for a lot of people to itemize. I thought about that, too. But I think it's also true that charitable contributions via itemization were ripe for abuse. I won't go into details now. I think people who are going to give are going to give, without worrying too much about how it impacts their taxes. Those that can afford to give "a lot more" can still do so and benefit from itemizing.

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

Post by Thesaints » Mon Apr 22, 2019 7:25 pm

gluskap wrote:
Mon Apr 22, 2019 4:47 pm
My taxes went up. First time I've owed money ever.
Did your taxes go up, or did your deductions go down ?

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

Post by trueblueky » Mon Apr 22, 2019 7:50 pm

scrabbler1 wrote:
Mon Apr 22, 2019 5:05 pm
If you don't like what they did to the forms, as in all those extra schedules (1-6) from dicing up the old 1040 form and eliminating the old short forms (1040A, 1040EZ), then let Nina Olson of the Taxpayer Advocate know. I wrote her last month and she was glad to hear my complaints.

Her email address is nina.e.olson@irs.gov .
I led an AARP TaxAide site. Despite preparing slightly fewer returns (there were 11 Tuesdays in Feb/Mar/Apr last year, but only ten this year), we used more paper (and presumably toner). The old 1040 had two sides; the new postcard 1040 has two sides. Add the schedules, which were new. Subtract some Schedule A. Our experience was more paper.

I reported that up the TaxAide chain. Now I have written the IRS. Thank you.

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

Post by CeeKay1729 » Mon Apr 22, 2019 7:57 pm

My taxes owed went down considerably (5 figures). Income didn't change much from last year (~375ish). I've been in AMT for the past decade so I was never able to deduct full SALT anyways. Deductions was about 50% from prior years but AMT change, lower brackets, and child/dependent credits more than offset SALT limits.

Live in a high tax state (CA) for reference.

:sharebeer

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

Post by Thesaints » Mon Apr 22, 2019 7:58 pm

trueblueky wrote:
Mon Apr 22, 2019 7:50 pm
Our experience was more paper.
New forms and schedules have a lot more blank spaces...

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Re: How did you feel about your 2018 tax returns?

Post by White Coat Investor » Mon Apr 22, 2019 10:09 pm

vitaflo wrote:
Mon Apr 22, 2019 3:36 pm
White Coat Investor wrote:
Mon Apr 22, 2019 2:54 pm
vitaflo wrote:
Mon Apr 22, 2019 12:00 pm
Creditcardguy wrote:
Mon Apr 22, 2019 11:47 am
As a small business owner, my taxes went down substantially. I was happy, happy, happy. :D
Same. The QBI deduction is ridiculous.
Unless your work is a specified service.
Even if you're a specified service, your income has to be above $315,000 (joint) for there to be a phase out. If you make less than $315k, you'll get the full deduction, specified service or not.
How can you get a "ridiculous" tax deduction with an income under $315K? :)
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Re: How did you feel about your 2018 tax returns?

Post by il0kin » Tue Apr 23, 2019 8:50 am

grabiner wrote:
Mon Apr 22, 2019 2:48 pm
il0kin wrote:
Mon Apr 22, 2019 2:43 pm
There were two things that impacted us:

1. The child credit increase. This is a step in the right direction to helping offset the very high cost of child care.
Unless you became newly eligible (over the old limit but under the new one), this was a wash; the old credit plus the (now-gone) personal exemption for a child were about the same value. If you were in the 25% tax bracket in 2017, you got a $1000 child tax credit, and $1013 in lower tax from the $4050 exemption; now, you get a $2000 credit, and lose the $913 tax reduction from what would have been a $4150 exemption in the 22% bracket.
Interesting. I’m not a tax wiz by any means but that makes sense. A dollar is a dollar regardless of what it’s named, personal exemption vs. child credit.

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Re: How did you feel about your 2018 tax returns?

Post by Glockenspiel » Tue Apr 23, 2019 1:54 pm

il0kin wrote:
Tue Apr 23, 2019 8:50 am
grabiner wrote:
Mon Apr 22, 2019 2:48 pm
il0kin wrote:
Mon Apr 22, 2019 2:43 pm
There were two things that impacted us:

1. The child credit increase. This is a step in the right direction to helping offset the very high cost of child care.
Unless you became newly eligible (over the old limit but under the new one), this was a wash; the old credit plus the (now-gone) personal exemption for a child were about the same value. If you were in the 25% tax bracket in 2017, you got a $1000 child tax credit, and $1013 in lower tax from the $4050 exemption; now, you get a $2000 credit, and lose the $913 tax reduction from what would have been a $4150 exemption in the 22% bracket.
Interesting. I’m not a tax wiz by any means but that makes sense. A dollar is a dollar regardless of what it’s named, personal exemption vs. child credit.
I agree that it's a wash, but I think a lot of people are in the range of income where previously they didn't qualify for the child tax credit and now they do qualify. This would be everyone with income above $110,000 in 2017, and less than $400k in income for 2018, for married filing jointly people.

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Re: How did you feel about your 2018 tax returns?

Post by vitaflo » Tue Apr 23, 2019 9:48 pm

White Coat Investor wrote:
Mon Apr 22, 2019 10:09 pm
vitaflo wrote:
Mon Apr 22, 2019 3:36 pm
White Coat Investor wrote:
Mon Apr 22, 2019 2:54 pm
vitaflo wrote:
Mon Apr 22, 2019 12:00 pm
Creditcardguy wrote:
Mon Apr 22, 2019 11:47 am
As a small business owner, my taxes went down substantially. I was happy, happy, happy. :D
Same. The QBI deduction is ridiculous.
Unless your work is a specified service.
Even if you're a specified service, your income has to be above $315,000 (joint) for there to be a phase out. If you make less than $315k, you'll get the full deduction, specified service or not.
How can you get a "ridiculous" tax deduction with an income under $315K? :)
Everything is relative. :)

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Re: How did you feel about your 2018 tax returns?

Post by White Coat Investor » Wed Apr 24, 2019 1:23 am

vitaflo wrote:
Tue Apr 23, 2019 9:48 pm
White Coat Investor wrote:
Mon Apr 22, 2019 10:09 pm
vitaflo wrote:
Mon Apr 22, 2019 3:36 pm
White Coat Investor wrote:
Mon Apr 22, 2019 2:54 pm
vitaflo wrote:
Mon Apr 22, 2019 12:00 pm


Same. The QBI deduction is ridiculous.
Unless your work is a specified service.
Even if you're a specified service, your income has to be above $315,000 (joint) for there to be a phase out. If you make less than $315k, you'll get the full deduction, specified service or not.
How can you get a "ridiculous" tax deduction with an income under $315K? :)
Everything is relative. :)
At most, your 199A deduction on that taxable income is in the upper 5 figure range, more likely in the lower 5 figure range. It sure beats a kick in the teeth, but I think lots of people have deductions like that from charitable giving and mortgage interest and certainly retirement account contributions. But when your 199A is dwarfing your other deductions, then we're talking about ridiculous. But I don't think you can get there and keep that taxable income under $315K, much less the single limit of half that.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

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vitaflo
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Re: How did you feel about your 2018 tax returns?

Post by vitaflo » Wed Apr 24, 2019 11:12 am

White Coat Investor wrote:
Wed Apr 24, 2019 1:23 am
vitaflo wrote:
Tue Apr 23, 2019 9:48 pm
White Coat Investor wrote:
Mon Apr 22, 2019 10:09 pm
vitaflo wrote:
Mon Apr 22, 2019 3:36 pm
White Coat Investor wrote:
Mon Apr 22, 2019 2:54 pm


Unless your work is a specified service.
Even if you're a specified service, your income has to be above $315,000 (joint) for there to be a phase out. If you make less than $315k, you'll get the full deduction, specified service or not.
How can you get a "ridiculous" tax deduction with an income under $315K? :)
Everything is relative. :)
At most, your 199A deduction on that taxable income is in the upper 5 figure range, more likely in the lower 5 figure range. It sure beats a kick in the teeth, but I think lots of people have deductions like that from charitable giving and mortgage interest and certainly retirement account contributions. But when your 199A is dwarfing your other deductions, then we're talking about ridiculous. But I don't think you can get there and keep that taxable income under $315K, much less the single limit of half that.
For me, a free $36k deduction on top of all the other deductions I get already as a biz is a bit ridiculous in my eyes. No that's not as high as my retirement contributions (to your point), but it is in addition to. I'm not complaining, just more of a "not really sure why I deserve this but ok".

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White Coat Investor
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Re: How did you feel about your 2018 tax returns?

Post by White Coat Investor » Wed Apr 24, 2019 3:27 pm

vitaflo wrote:
Wed Apr 24, 2019 11:12 am
White Coat Investor wrote:
Wed Apr 24, 2019 1:23 am
vitaflo wrote:
Tue Apr 23, 2019 9:48 pm
White Coat Investor wrote:
Mon Apr 22, 2019 10:09 pm
vitaflo wrote:
Mon Apr 22, 2019 3:36 pm


Even if you're a specified service, your income has to be above $315,000 (joint) for there to be a phase out. If you make less than $315k, you'll get the full deduction, specified service or not.
How can you get a "ridiculous" tax deduction with an income under $315K? :)
Everything is relative. :)
At most, your 199A deduction on that taxable income is in the upper 5 figure range, more likely in the lower 5 figure range. It sure beats a kick in the teeth, but I think lots of people have deductions like that from charitable giving and mortgage interest and certainly retirement account contributions. But when your 199A is dwarfing your other deductions, then we're talking about ridiculous. But I don't think you can get there and keep that taxable income under $315K, much less the single limit of half that.
For me, a free $36k deduction on top of all the other deductions I get already as a biz is a bit ridiculous in my eyes. No that's not as high as my retirement contributions (to your point), but it is in addition to. I'm not complaining, just more of a "not really sure why I deserve this but ok".
You deserve it to maintain competitiveness with C Corporations which got a tax cut. That's the purpose of the 199A deduction, to put sole proprietorships, partnerships, and S Corps and more equal footing. Otherwise, we'd all run out and change to C Corp structure. One of the main purposes of the TJCA was to reduce business taxes in order to promote business.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

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vitaflo
Posts: 1235
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Re: How did you feel about your 2018 tax returns?

Post by vitaflo » Thu Apr 25, 2019 11:22 am

White Coat Investor wrote:
Wed Apr 24, 2019 3:27 pm
vitaflo wrote:
Wed Apr 24, 2019 11:12 am
White Coat Investor wrote:
Wed Apr 24, 2019 1:23 am
vitaflo wrote:
Tue Apr 23, 2019 9:48 pm
White Coat Investor wrote:
Mon Apr 22, 2019 10:09 pm


How can you get a "ridiculous" tax deduction with an income under $315K? :)
Everything is relative. :)
At most, your 199A deduction on that taxable income is in the upper 5 figure range, more likely in the lower 5 figure range. It sure beats a kick in the teeth, but I think lots of people have deductions like that from charitable giving and mortgage interest and certainly retirement account contributions. But when your 199A is dwarfing your other deductions, then we're talking about ridiculous. But I don't think you can get there and keep that taxable income under $315K, much less the single limit of half that.
For me, a free $36k deduction on top of all the other deductions I get already as a biz is a bit ridiculous in my eyes. No that's not as high as my retirement contributions (to your point), but it is in addition to. I'm not complaining, just more of a "not really sure why I deserve this but ok".
You deserve it to maintain competitiveness with C Corporations which got a tax cut. That's the purpose of the 199A deduction, to put sole proprietorships, partnerships, and S Corps and more equal footing. Otherwise, we'd all run out and change to C Corp structure. One of the main purposes of the TJCA was to reduce business taxes in order to promote business.
Actually one of the first things I thought when I saw the deduction amount was "well, that pays for my health care premiums this year". Since I don't get a health care benefit being a sole prop, it certainly helps. Also, I forgot about the C-Corp cuts, that's a good point.

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FiveK
Posts: 8428
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Re: How did you feel about your 2018 tax returns?

Post by FiveK » Thu Apr 25, 2019 11:42 am

vitaflo wrote:
Thu Apr 25, 2019 11:22 am
Since I don't get a health care benefit being a sole prop....
If not covered by an employer's subsidized health insurance, a sole proprietor may take the Self-Employed Health Insurance subtraction on line 29 of https://www.irs.gov/pub/irs-pdf/f1040s1.pdf.

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White Coat Investor
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Re: How did you feel about your 2018 tax returns?

Post by White Coat Investor » Thu Apr 25, 2019 12:28 pm

FiveK wrote:
Thu Apr 25, 2019 11:42 am
vitaflo wrote:
Thu Apr 25, 2019 11:22 am
Since I don't get a health care benefit being a sole prop....
If not covered by an employer's subsidized health insurance, a sole proprietor may take the Self-Employed Health Insurance subtraction on line 29 of https://www.irs.gov/pub/irs-pdf/f1040s1.pdf.
Exactly. At least you can buy it with pre-tax dollars. That's worth something. Between that and the HSA deduction it's keeping me off the Health Sharing Ministry plans.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

wrongfunds
Posts: 2307
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Re: [2018 tax return - How does it compare to previous years?]

Post by wrongfunds » Fri Apr 26, 2019 3:59 pm

what is the current going timeline for return processing? this year, the IRS has been sitting on my return for over couple of weeks. usually it had been less than a week in the past few years after electronically filing the return near the end of the deadline. the usual assurance that over 90% of the taxpayers get their refund in less than 3 weeks does not mean much if one ends up in the other 10% :-(

clip651
Posts: 582
Joined: Thu Oct 02, 2014 11:02 am

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

Post by clip651 » Fri Apr 26, 2019 4:13 pm

wrongfunds wrote:
Fri Apr 26, 2019 3:59 pm
what is the current going timeline for return processing? this year, the IRS has been sitting on my return for over couple of weeks. usually it had been less than a week in the past few years after electronically filing the return near the end of the deadline. the usual assurance that over 90% of the taxpayers get their refund in less than 3 weeks does not mean much if one ends up in the other 10% :-(
Have you checked your refund status online with the IRS?

As a random data point, a family member and I both filed returns in February. I had my refund in about 2 weeks. Family member had their refund in 5 weeks. Status on the refund status site with the IRS was accurate for both of us when we checked.

I would expect that return volume is higher as the tax deadline approaches, but that the IRS would also be expecting that. I don't know the net effect of that on refund speed.

So ... check your status online and give it some more time.

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