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

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

Post by snowman » Mon Feb 11, 2019 8:08 pm

MarkNYC wrote:
Mon Feb 11, 2019 7:20 pm
Here is my general overview of the tax changes. Leaving aside the 199A deduction, there were 5 significant changes that in some combination affected all taxpayers. The first 3 benefit the taxpayer and the last 2 hurt the taxpayer: (1) reduction in tax rates, (2) increase in standard deduction, (3) effective elimination of AMT, (4) loss of exemption deductions, and (5) limit on SALT deduction.

For most taxpayers, the first 3 changes outweigh the last 2,resulting in a reduction in federal tax. For some, including a family of 4 making $120K - $150K, it's possible the last 2 changes outweigh the first 3, causing an increase in total federal tax.
That's a good summary. I would also add 4th change into the benefit category: doubling of Child Tax Credit. That is really big for working class families, as it more than offsets the loss of personal exemption.

Coltrane75
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Re: Smaller tax refunds this year? Clear explanation please

Post by Coltrane75 » Mon Feb 11, 2019 8:15 pm

To the original poster; I think we'll have to wait some time before all the information is in for this year's tax returns before we can reach a definitive conclusion. Many of the posts here are all over the map in terms of how people are effected.

In the meantime you could check out the forecasts/studies that point out which segments of the population would benefit and which ones wouldn't.

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

Post by LadyGeek » Mon Feb 11, 2019 8:16 pm

To keep this actionable, please focus on your own situation.
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Jags4186
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Re: Smaller tax refunds this year? Clear explanation please

Post by Jags4186 » Mon Feb 11, 2019 8:20 pm

Our tax burden went down compared to 2017. We took the standard deduction in 2017.

We bought a house in 2018. Under the old rules we would have paid less than we did under the new rules in 2018, but alas we never got that benefit so we aren’t missing out on anything.

Typ997S
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Re: Smaller tax refunds this year? Clear explanation please

Post by Typ997S » Mon Feb 11, 2019 8:30 pm

KyleAAA wrote:
Mon Feb 11, 2019 7:10 pm
There is no one-size-fits-all explanation. Some people WILL pay higher taxes this year. Most people will pay less in taxes. The size of their refund is irrelevant. If one didn't change their W-4 this year, they are probably more likely to have received a bit more in every paycheck and a smaller refund. They likely paid less tax overall, though.

Turbotax has a succint page on the possibilities
https://ttlc.intuit.com/questions/19010 ... ast-year-s
This ^

I am a high earner in California, with a (very, relative to the rest of the country) expensive house, so the SALT limitation hit me hard. However, because I'm in a high tax state and I have 3 kids, and write off a lot of mortgage interest, the AMT used to hit me hard. It's now effectively gone away (for my situation.) So, net, I'm actually a little ahead. Your mileage will definitely vary!

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

Post by MarkNYC » Mon Feb 11, 2019 8:35 pm

livesoft wrote:
Mon Feb 11, 2019 6:06 pm
breakfastmuffin wrote:
Mon Feb 11, 2019 6:00 pm
Just to add a personal anecdote -- I'm one of those people in NY who is paying more overall in taxes due to the loss of the SALT deduction, despite changes in marginal tax rates. Most income is W2 and not from sale of stock or options exercise.
Yes, but are you a highly paid professional? I expect that many taxpayers in NY, CA, and MA had their taxes go up, but not the top-end taxpayers. Yes, I might be wrong on that which would make me happy
Might depend on what qualifies as "top-end taxpayers." Here is my general observation on high-income taxpayers in states with high income/property tax. With income in the range of say $250K - $850K, AMT almost always applied in prior years. Under the new law, the effective elimination of AMT along with the reduction in tax rates more than outweighs the SALT deduction limit, causing a net reduction in federal tax. When income is much higher to the level where AMT did not apply previously, the new SALT limit hurts more than the reduction in rates helps, causing a net increase in federal tax.

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

Post by xenochrony » Mon Feb 11, 2019 8:37 pm

Refund? What's that? :D

Wife and I enjoy a lower effective income tax rate in 2018 as compared to 2017 due largely to the Sec199A QBI deduction that we both receive for our respective businesses. 20% deduction ain't chump change.

xenochrony

spencer99
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Re: Smaller tax refunds this year? Clear explanation please

Post by spencer99 » Mon Feb 11, 2019 9:38 pm

The article linked below by Matthew Yglesias offered the best explanation I've read.

From the article:

"And the big story here is that as a result of the new tax law, the Treasury Department tweaked things so that on average taxpayers’ withholdings fell by more than their actual taxes owed."

(Acknowledging that the general impact of changes applies to no one in particular.)


https://www.vox.com/policy-and-politics ... ding-trump

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Re: Smaller tax refunds this year? Clear explanation please

Post by Traveler » Mon Feb 11, 2019 9:39 pm

I did my taxes yesterday and while I didn't run both year's figures through each year's software, here are a few stats:
My taxable increased 4.8% in 2018 vs 2017
My effective tax rate in 2018 was 19.7% and in 2017 it was 22.4%
Regarding the refund, last year I owed some, this year I'm getting some back. Of course this is irrelevant to my tax liability/obligation.

So my taxes were lower in 2018. Not happy that my reduction essentially goes on the national credit card, but it is what it is. I'm not writing a check to the IRS for it, that's for sure.

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arcticpineapplecorp.
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Re: Smaller tax refunds this year? Clear explanation please

Post by arcticpineapplecorp. » Mon Feb 11, 2019 10:09 pm

LadyGeek wrote:
Mon Feb 11, 2019 8:16 pm
To keep this actionable, please focus on your own situation.
A few weeks ago I informed my girlfriend's father that he should file as head of household since he provides 100% of the costs of support for his adult son who lives with him (and his son is unemployed, $0 income). He had never filed head of household before. Those of you who know taxes understand the difference in standard deduction between single ($12,000) and head of household ($18,000). That's a huge difference and reduces taxable income by $6000. At the 22% rate that's a tax savings of .22 X $6000 = $1320 (my girlfriend's father is in the 22% marginal bracket).

Anyway, he's always been used to owing taxes since he wants as much in his check to live on (which trades off paying taxes later rather than upfront). This plus the fact that he is working full time and getting SS means he wasn't having enough (or any) taxes withheld from his SS and since his earned income makes 85% of his SS taxable, he was owing money the last few years (he finally got SSA to start withholding from his SS).

Fast foward, he just did his taxes and wants me to double check his work because he's shocked he's getting a refund rather than owing money (even though I explained the $1320 in tax savings earlier).

Went out to dinner last night and he was talking about how the "average taxpayer has seen 8% less in tax returns" (not sure where he got this figure from and didn't ask). I smiled and said, "But you're getting a big tax refund this year instead of owing money to the IRS, right?" Silence followed. Kinda funny that we can focus on some sob stories of others (without really knowing all the details) while ignoring our own good fortune.

For my situation, I haven't done my taxes yet but ran taxcaster yesterday and it appears my refund should be very similar to year's past (small refund). But I also have been able to put more money in my 457b (tax deferred to lower my marginal to 12% and the rest in Roth) without a change in my take home pay. So that's definitely a win for us.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

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

Post by GoPackGo » Tue Feb 12, 2019 12:09 am

In my case, single filer, ~$74k in income (in 2018, made less in 2017):
2017 effective tax rate: 14.1%
2018 effective tax rate: 13.0%
2018 income with 2017 tax laws effective tax rate: 15.8%

By my calculation, the TCJA reduced my federal income tax burden by $2,071.

PinotGris
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Tax 2018: Shock and Awe

Post by PinotGris » Tue Feb 12, 2019 12:02 pm

[Thread merged into here, see below. --admin LadyGeek]

Just entered all my data into Turbo Tax. I am not sure if I can trust it.

Retired, filing MFJ. Total income slightly higher than 2017. No other significant change.
Tax Bracket - down from 33% to 24%
Effective Tax Rate- down from 19% to 16%
Standard deduction has absorbed all other deductions such as property tax.
ATM - 0

The form is indeed a post card size, just the bottom half of a sheet.

How are YOU doing?

livesoft
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Re: Tax 2018: Shock and Awe

Post by livesoft » Tue Feb 12, 2019 12:05 pm

I feel I got screwed as noted in other threads. Perhaps this thread should be merged with one of them?
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earlyout
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Re: Tax 2018: Shock and Awe

Post by earlyout » Tue Feb 12, 2019 12:33 pm

Not quite postcard size. The largest postcard accepted by the U.S. Post Office is 4.25" x 6" (25.5 sq in). This years 1040 tax form is a half sheet of paper 8.5" x 5.5" (46.75 sq. in.).

Chicago60
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Re: Tax 2018: Shock and Awe

Post by Chicago60 » Tue Feb 12, 2019 12:56 pm

You were in the 33% bracket, and now are in the 24% bracket, and you do not need to complete any forms other than the 1040?

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iceport
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Re: Tax 2018: Shock and Awe

Post by iceport » Tue Feb 12, 2019 1:27 pm

PinotGris wrote:
Tue Feb 12, 2019 12:02 pm
The form is indeed a post card size, just the bottom half of a sheet.

How are YOU doing?
Not as good as you!

I haven't figured my final tax liability yet, but my tax return bulked up from prior years:

2017:
Form 1040 (2 full sides)
Schedule A
Schedule B
Schedule D
Schedule E
Form 8582

2018:
Form 1040 (1 half side)
Schedule 1
Schedule 3
Schedule 5
Schedule B
Schedule D
Schedule E
Form 8582
(This doesn't include additional forms required to document a Roth conversion and some TLH, which were not involved last year.)

What a pointless, childish tax form revision that has only served to make more work for everyone involved. Clearly, any claim of "simplification" is fake.

Bravo!
"Discipline matters more than allocation.” ─William Bernstein

PinotGris
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Re: Tax 2018: Shock and Awe

Post by PinotGris » Tue Feb 12, 2019 1:38 pm

Chicago60 wrote:
Tue Feb 12, 2019 12:56 pm
You were in the 33% bracket, and now are in the 24% bracket, and you do not need to complete any forms other than the 1040?
On TurboTax all the information on other forms/schedules/etc filter down to 1040. We don't do our taxes by hand, it is electronic. Yes, we have to attach those form when we eventually mail all the papers to IRS and State. I am not sure I understand your question.

Yes I was slightly exaggerating about the size. I printed the 1040 alone and was quite surprised at how few line items were there and all fits into the bottom half. We still have few things to enter but they are minor and they are still trickling in.

Is anyone else using TurboTax and feel comfortable with what it is doing?

3dream3
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Re: Tax 2018: Shock and Awe

Post by 3dream3 » Tue Feb 12, 2019 1:43 pm

I was actually shocked/awed but in a pleasantly surprised way this year so we're probably the minority based upon everything else that is being posted on here and in the news.

MFJ - total income up about 30k
Tax Bracket - from 33% to 32%
Effective Tax Rate- from 26% to 19%
Took standard deduction this year whereas last year we itemized almost 37k (did not like the limit on SALT this year)
AMT = 0; really liked this one after getting hit with AMT every year

The only other difference was that we TLH'd in 2018. Usually, we either end up owing a little or getting back a little... this year, we're getting back a lot which was a pleasant surprise. We didn't make any additional changes to our W2s either including the additional withheld that we have from my wife's salary. We will have to revisit that now since it seems, according to this year, we're now withholding too much.

sailaway
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Re: Tax 2018: Shock and Awe

Post by sailaway » Tue Feb 12, 2019 1:43 pm

PinotGris wrote:
Tue Feb 12, 2019 1:38 pm
Chicago60 wrote:
Tue Feb 12, 2019 12:56 pm
You were in the 33% bracket, and now are in the 24% bracket, and you do not need to complete any forms other than the 1040?
On TurboTax all the information on other forms/schedules/etc filter down to 1040. We don't do our taxes by hand, it is electronic. Yes, we have to attach those form when we eventually mail all the papers to IRS and State. I am not sure I understand your question.

Yes I was slightly exaggerating about the size. I printed the 1040 alone and was quite surprised at how few line items were there and all fits into the bottom half. We still have few things to enter but they are minor and they are still trickling in.

Is anyone else using TurboTax and feel comfortable with what it is doing?
Stuff got moved from the 1040 to new schedules. This has been known since the drafts were released last year.

ofckrupke
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Re: Tax 2018: Shock and Awe

Post by ofckrupke » Tue Feb 12, 2019 1:45 pm

livesoft wrote:
Tue Feb 12, 2019 12:05 pm
I feel I got screwed as noted in other threads. Perhaps this thread should be merged with one of them?
Perhaps (s)he should instead tail-post a copy in rebuttal, in each and every one of the threads in which you complained so noted.

PinotGris
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Re: Tax 2018: Shock and Awe

Post by PinotGris » Tue Feb 12, 2019 1:50 pm

3dream3 wrote:
Tue Feb 12, 2019 1:43 pm
I was actually shocked/awed but in a pleasantly surprised way this year so we're probably the minority based upon everything else that is being posted on here and in the news.

MFJ - total income up about 30k
Tax Bracket - from 33% to 32%
Effective Tax Rate- from 26% to 19%
Took standard deduction this year whereas last year we itemized almost 37k (did not like the limit on SALT this year)
AMT = 0; really liked this one after getting hit with AMT every year

The only other difference was that we TLH'd in 2018. Usually, we either end up owing a little or getting back a little... this year, we're getting back a lot which was a pleasant surprise. We didn't make any additional changes to our W2s either including the additional withheld that we have from my wife's salary. We will have to revisit that now since it seems, according to this year, we're now withholding too much.
We have no W2. Well, I have one but it is very small, a technicality. We do have large RMW and dividend income and we also have TLH. We will be getting a refund as we withheld more on the RMW than required.

FootballFan5548
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Re: Tax 2018: Shock and Awe

Post by FootballFan5548 » Tue Feb 12, 2019 1:53 pm

3dream3 wrote:
Tue Feb 12, 2019 1:43 pm
I was actually shocked/awed but in a pleasantly surprised way this year so we're probably the minority based upon everything else that is being posted on here and in the news.

MFJ - total income up about 30k
Tax Bracket - from 33% to 32%
Effective Tax Rate- from 26% to 19%
Took standard deduction this year whereas last year we itemized almost 37k (did not like the limit on SALT this year)
AMT = 0; really liked this one after getting hit with AMT every year

The only other difference was that we TLH'd in 2018. Usually, we either end up owing a little or getting back a little... this year, we're getting back a lot which was a pleasant surprise. We didn't make any additional changes to our W2s either including the additional withheld that we have from my wife's salary. We will have to revisit that now since it seems, according to this year, we're now withholding too much.

This is my situation as well. I usually owe or get back a small amount. AMT usually crushes me. With the absence of AMT (I still itemize about $40k of deductions), I'm getting back much more than expected this year, plus I had a lower withholding rate throughout the year.
I'm guessing it's rare, but it's welcomed.

SchruteB&B
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Re: Tax 2018: Shock and Awe

Post by SchruteB&B » Tue Feb 12, 2019 1:56 pm

Have just finished gathering info for own return, but did help elderly parent file. Around 25k in taxable income from SS, pension and RMD from IRA. Turbotax comparison says she owes $730 less than she would have with the 2017 tax laws.

Decided to run rough estimate on Turbotax of own taxes and looks like a substantial reduction for us under 2018 laws vs 2017.

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Epsilon Delta
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Re: Tax 2018: Shock and Awe

Post by Epsilon Delta » Tue Feb 12, 2019 2:19 pm

The instructions specifically tell you to use a full sheet for every form and schedule and not to cut them down. So it's not postcard sized, it's just lots of whitespace. And an extra half dozen pages for Schedules. They could at least have used a large font, and allowed more room next to the IRA line, there's a lot of things that have to be written there, I think I'm going to have to use a microdot to get them all in.

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jjustice
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Re: Tax 2018: Shock and Awe

Post by jjustice » Tue Feb 12, 2019 2:27 pm

Yes, I've been shocked. I am a TaxAide volunteer, and the "postcard" 1040 has made it much more difficult to walk clients through their finished returns. The print is smaller, some items have been moved off the 1040, and mysterious check boxes and numbers mark information that has to be chased down elsewhere. Understanding the former 1040 was not easy for some of our clients. The new one is an impossible Easter egg hunt.

Furthermore, there is more paper used because additional schedules are necessary. The "postcard" 1040 is a shocking farce.
John

primetime
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Re: Tax 2018: Shock and Awe

Post by primetime » Tue Feb 12, 2019 2:36 pm

Why is OLT.com so awesome?

I filed on 1/26 and the funds for federal were in my account on 1/28 and in my account for state on 2/11.

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HueyLD
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Re: Tax 2018: Shock and Awe

Post by HueyLD » Tue Feb 12, 2019 2:42 pm

jjustice wrote:
Tue Feb 12, 2019 2:27 pm
Yes, I've been shocked. I am a TaxAide volunteer, and the "postcard" 1040 has made it much more difficult to walk clients through their finished returns. The print is smaller, some items have been moved off the 1040, and mysterious check boxes and numbers mark information that has to be chased down elsewhere. Understanding the former 1040 was not easy for some of our clients. The new one is an impossible Easter egg hunt.

Furthermore, there is more paper used because additional schedules are necessary. The "postcard" 1040 is a shocking farce.
John
+1000!!!

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Darth Xanadu
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Re: Tax 2018: Shock and Awe

Post by Darth Xanadu » Tue Feb 12, 2019 2:46 pm

Income went up about 20%
Marginal rate went from 25% to 24%
Effective Rate increased by about 1 percentage point
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02nz
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Re: Tax 2018: Shock and Awe

Post by 02nz » Tue Feb 12, 2019 2:49 pm

jjustice wrote:
Tue Feb 12, 2019 2:27 pm
The "postcard" 1040 is a shocking farce.
A farce? Absolutely. But if you're shocked, well, you need to turn on the TV once in a while. :P

Regressor
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Re: Tax 2018: Shock and Awe

Post by Regressor » Tue Feb 12, 2019 2:49 pm

With no change in salary, my by-monthly paycheck is $32 higher, so a bit below $800 better than last year. However, this year I'm not getting money back from the government but owing it instead with the total change being around 1000, after including $3000 for capital loss that I didn't have last year. So in the end, I'm counting that I'm at a loss roughly about $500.
I live in NYC.

Mike Scott
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Re: Tax 2018: Shock and Awe

Post by Mike Scott » Tue Feb 12, 2019 2:56 pm

2018 AGI down a few hundred and Federal taxes up a few hundred compared to 2017. The paper form format is pretty complicated.

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baconavocado
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Re: Tax 2018: Shock and Awe

Post by baconavocado » Tue Feb 12, 2019 3:01 pm

I started entering my data but stopped when I got a 1099 that I'm pretty sure is inaccurate.

I think we're going to be disadvantaged by the SALT limit.

3funder
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Re: Tax 2018: Shock and Awe

Post by 3funder » Tue Feb 12, 2019 3:12 pm

My wife and I made out rather well; that said (and not to be political or anything), we didn't need a tax cut. Call it bittersweet.

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Re: Tax 2018: Shock and Awe

Post by bengal22 » Tue Feb 12, 2019 3:25 pm

I do taxes for AAARP.

I find the difference in taxes from last year is minimal. Since we file electronically the size of the forms or number of forms is irrelevant.

I do have to explain to clients that they need to look at actual tax bill not how much they get back or owe to determine difference in their taxes. Many had less taxes withheld.

I have no issues with this year and will use my tax savings to fund my retirement. Love the change.
"Earn All You Can; Give All You Can; Save All You Can." .... John Wesley

Calico
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Re: Tax 2018: Shock and Awe

Post by Calico » Tue Feb 12, 2019 3:35 pm

My federal didn't go up or down really. I mean, technically my total tax bill went up a little ($400 more total), but I also got a raise and had less deductions compared to 2017 (I was able to claim some medical deductions in 2017 but I didn't get those in 2018. Not that I am complaining. I rather not have enough medical bills to be able to claim them). The nice thing is this year I didn't get a refund and only owed $240. I've never quite been able to get to that sweet spot of no refund and owing just a little, but not too much. This is the closest I've gotten.

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munemaker
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Re: Tax 2018: Shock and Awe

Post by munemaker » Tue Feb 12, 2019 3:37 pm

3funder wrote:
Tue Feb 12, 2019 3:12 pm
My wife and I made out rather well; that said (and not to be political or anything), we didn't need a tax cut. Call it bittersweet.
Why would you make such a statement? Not sure how you evaluate need in this case. Does one "need" a salary increase or bonus, tax reduction or buying an item on sale? Personally I like more money rather than less, whether I need it or not.

You are not required to keep the tax cut. There is a provision for the government to accept contributions. https://www.treasurydirect.gov/govt/rep ... t/gift.htm

Or you can just give it to charity.

Having money you do not need is clearly a first world problem that would seem easy to remedy.

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Epsilon Delta
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Re: Tax 2018: Shock and Awe

Post by Epsilon Delta » Tue Feb 12, 2019 3:38 pm

And my favorite -- the line that shall not be named. The white rectangle to the left of line 6.

primetime
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Re: Tax 2018: Shock and Awe

Post by primetime » Tue Feb 12, 2019 3:39 pm

One man's need is another man's donation. :D

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

Post by LadyGeek » Tue Feb 12, 2019 4:28 pm

I merged PinotGris's thread into here. I also retitled the thread to be a discussion of your 2018 tax filing experience.
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cheezit
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Re: [2018 tax return - How does it compare to previous years?]

Post by cheezit » Tue Feb 12, 2019 4:39 pm

Filing was pretty easy, although I think the changes to the paper 1040 were dumb and gimmicky. I only noticed them because I like to fill out a paper return to check my tax software's results against; filing electronically w/ FTUSA was a breeze.

Got a larger federal refund than expected, despite having updated the withholding as soon as I could (I aim for a $1 refund); effective tax rate down a fair bit, mostly due to the increase in the standard deduction and the fact that we had another child born during 2018 AND the child tax credit increased. The reduction of the 15% bracket to 12% helped to a lesser extent.

retiredjg
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Re: Tax 2018: Shock and Awe

Post by retiredjg » Tue Feb 12, 2019 4:43 pm

Epsilon Delta wrote:
Tue Feb 12, 2019 3:38 pm
And my favorite -- the line that shall not be named. The white rectangle to the left of line 6.
What white rectangle? :shock: Am I missing a white rectangle????

Better2bWise
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Re: [2018 tax return - How does it compare to previous years?]

Post by Better2bWise » Tue Feb 12, 2019 4:49 pm

Best Calculator that I have been able to find for comparison of taxable income and deductions for change in tax code.

https://taxfoundation.org/2018-tax-calculator/

Chicago60
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Re: Tax 2018: Shock and Awe

Post by Chicago60 » Tue Feb 12, 2019 4:58 pm

PinotGris wrote:
Tue Feb 12, 2019 1:38 pm
Chicago60 wrote:
Tue Feb 12, 2019 12:56 pm
You were in the 33% bracket, and now are in the 24% bracket, and you do not need to complete any forms other than the 1040?
On TurboTax all the information on other forms/schedules/etc filter down to 1040. We don't do our taxes by hand, it is electronic. Yes, we have to attach those form when we eventually mail all the papers to IRS and State. I am not sure I understand your question.

Yes I was slightly exaggerating about the size. I printed the 1040 alone and was quite surprised at how few line items were there and all fits into the bottom half. We still have few things to enter but they are minor and they are still trickling in.

Is anyone else using TurboTax and feel comfortable with what it is doing?
My question was because you implied that you only needed to complete the "postcard" size of the tax form, when, in fact, you actually did have to complete other forms and schedules. I doubt there are many people in the 24% tax bracket who do not need to complete more than just the 1040 without also completing the many forms and schedules. Since you filed electronically, I am not sure why you pointed out the (false) promise that taxpayers can just file a "postcard" size 1040.

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Epsilon Delta
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Re: Tax 2018: Shock and Awe

Post by Epsilon Delta » Tue Feb 12, 2019 4:59 pm

retiredjg wrote:
Tue Feb 12, 2019 4:43 pm
Epsilon Delta wrote:
Tue Feb 12, 2019 3:38 pm
And my favorite -- the line that shall not be named. The white rectangle to the left of line 6.
What white rectangle? :shock: Am I missing a white rectangle????
You might just be calling it something else. Hard to say because it shall not be named, so circumlocutions are needed. On line 6 of form 1040 it's between "Schedule 1, line 22" and the five dot.
Form 1040 wrote:6Total income. Add lines 1 through 5. Add any amount from Schedule 1, line 22 [white rectangle that shall not be named] .....

BackOfTheNet
Posts: 209
Joined: Mon Nov 30, 2009 9:24 pm

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

Post by BackOfTheNet » Tue Feb 12, 2019 5:04 pm

2018:
Income: $171k
Fed Tax: $23k
Rate: ~13.5%

2019:
Income: $185k
Fed tax: $23k
Rate: ~12.5%

Made a little bit more money but owe about the same. Main difference is $4k in child tax credits that we previously did not qualify for.

Cuzz35
Posts: 428
Joined: Mon Jun 28, 2010 11:14 pm
Location: Marietta, GA

Re: Smaller tax refunds this year? Clear explanation please

Post by Cuzz35 » Tue Feb 12, 2019 5:08 pm

xenochrony wrote:
Mon Feb 11, 2019 8:37 pm
Refund? What's that? :D
It's that thing us accountants have our clients roll into the following year to cover their estimated tax obligations.

My income went up a lot and so did my overall tax but the tax law helped me a lot on the federal side. Not so much on the state because my state has a very small standard deduction and I used to itemize instead.

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dodecahedron
Posts: 4703
Joined: Tue Nov 12, 2013 12:28 pm

Re: Smaller tax refunds this year? Clear explanation please

Post by dodecahedron » Tue Feb 12, 2019 5:14 pm

snowman wrote:
Mon Feb 11, 2019 8:08 pm
MarkNYC wrote:
Mon Feb 11, 2019 7:20 pm
Here is my general overview of the tax changes. Leaving aside the 199A deduction, there were 5 significant changes that in some combination affected all taxpayers. The first 3 benefit the taxpayer and the last 2 hurt the taxpayer: (1) reduction in tax rates, (2) increase in standard deduction, (3) effective elimination of AMT, (4) loss of exemption deductions, and (5) limit on SALT deduction.

For most taxpayers, the first 3 changes outweigh the last 2,resulting in a reduction in federal tax. For some, including a family of 4 making $120K - $150K, it's possible the last 2 changes outweigh the first 3, causing an increase in total federal tax.
That's a good summary. I would also add 4th change into the benefit category: doubling of Child Tax Credit. That is really big for working class families, as it more than offsets the loss of personal exemption.
Depends how old their children are! (Our VITA site sees a lot of folks with older teens and young adult children as dependents. For them the $500 nonrefundable credit for other dependents is close to a wash with the personal exemption loss.)

But I agree it is a big deal for families with kids under 17 and deserves mention as a 4th major benefit.

TwstdSista
Posts: 996
Joined: Thu Nov 16, 2017 4:03 am

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

Post by TwstdSista » Tue Feb 12, 2019 5:27 pm

Our income was up about 5% this year and our total tax down about 2% - I'm calling that a win!

(an expected win, I paid pretty close attention to the tax changes that affected us and withheld a proper amount).

jeremyi
Posts: 27
Joined: Wed Aug 05, 2009 10:42 am

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

Post by jeremyi » Tue Feb 12, 2019 5:47 pm

My AGI increased by about $16k. From 15% marginal to 12% marginal.

Total tax went from about -$250 to -$2000 (negative). I suppose having a 4th child helped with that a bit, although we phased out of the Retirement Saver's Credit which we had claimed for many years.

Tax refund is larger by about $3k, partially due to withholding on a larger bonus this year that I couldn't easily avoid.

Nowizard
Posts: 2310
Joined: Tue Oct 23, 2007 5:33 pm

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

Post by Nowizard » Tue Feb 12, 2019 5:51 pm

First time to not itemize in many years, and it felt odd to complete the return quicker. Similar income and higher taxes in our case. We are in a toxic zone of significant income in retirement but not high enough to qualify for the deductions of the wealthy.

Tim

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