My Federal Tax Cut for 2018

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I had a thread the other day that got locked that was about me being miffed on having to pay a penalty where I claimed zero allowances - [Married -0 ] on my and my wife's W4 for a couple years now.

Just for informational purposes I compared tax year 2018 to 2017 ( with a little help from another forum member (thank you GMW). I though there might be some interest to this data point as there has been wide speculation as to whether the "Average Joe" is seeing a real tax break.

Please try to refrain from political comments out so we can keep this thread going for a couple days
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Drum roll please ....

Bottom line is :

I saw a 19 percent cut in actual taxes paid. This equates to a few thousand dollars in my (our) pocket vs. 2017.

If you want more specifics on my situation , I'll try to oblige.
 
Avoiding politics, but stating three facts: Fact #1: I saw a significant cut in my taxes, too, and I'm right smack dab in the middle class. I don't have the exact percentage yet, but it appears to be in the neighborhood of the OP. Fact #2: My friends on the left side of the political persuasion keep telling me I got screwed. Fact #3. I'd like to get screwed like that more often.
 
This penalty can be waived if it is a one year anomaly. I forget the form number you have to include.
Our total tax was down for 2018. With income up slightly.
 
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That is going to be the norm unless your SALT is way over $10,000. I live in California that is more of the norm here SALT wise. I'm losing $3,000 deduction from SALT but my schedule C business tax cut more than makes up for it.

Other thread seemed to be from underwitholding problem not SALT but haven't heard from that poster on specifics. Thanks for sharing...most will experience an effective tax rate reduction but there are AMT situations as well, etc.
 
I filed form 2210 and ticked box A requesting a complete waiver. I'm waiting for a nice letter from the IRS in about 6 months
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Either someone screwed up their withholding , or something like a child aging out, less interest paid on a house etc, or its just fake news.
 
I believe that one big problem is limited property tax deductions ($10K?) This is significant for states like CA and NY.
 
Originally Posted by knerml
I believe that one big problem is limited property tax deductions ($10K?) This is significant for states like CA and NY.


You are correct...larger the amount above $10,000 it starts eroding the other cuts.
 
Zero exemptions. No kids. Standard deduction is $24,000 for married filing jointly. My schedule A calculation was less than 1/2 that - so no itemization here for years.

If ADP screwed up mine, they screwed up millions of folks.
 
Originally Posted by Ken42
Only made a couple grand in 2018
Retired with disability
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At least you have Tricare, though! That must be huge and well-earned!
 
Originally Posted by knerml
I believe that one big problem is limited property tax deductions ($10K?) This is significant for states like CA and NY.


This is a big part of it. Near me, people are being hit HARD because of this. We're 2nd in the nation when it comes to property taxes. The $10k cap really hurt a lot of people. I'm ok with New Jersey placing ahead of us on this one
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OP, glad to hear that after further review you ended up ahead this year as compared to last year.
 
Another (related) data point comparing TY 2017 to TY 2018

Calculating my total tax as percent of my AGI

2017 = 13.604%
2018 = 10.975%
 
I've had the same income for the last few years. My tax liability has gone down by enough to purchase some form of small, two wheeled, off road, motorized toy
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No, not a new one.......

Of course the upcoming broken collar bone will require additional cash outlay....
 
Originally Posted by Cujet
I've had the same income for the last few years. My tax liability has gone down by enough to purchase some form of small, two wheeled, off road, motorized toy
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No, not a new one.......

Of course the upcoming broken collar bone will require additional cash outlay....



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Hopefully you have some pretax HSA money to use for that.
 
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Originally Posted by Ken42
Only made a couple grand in 2018
Retired with disability
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I just retired last November. I'm not collecting anything so my income will be under 2 grand this year. I'm working on my log cabin and plan to sell it in the Fall. And watching the savings dwindle.

I like that boxer six Outback in your signature, Ken42. I had a Subaru SVX in the 90's. Had to sell it. To fast on the Interstate
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I bought a Justy 3 banger for commuting to work. That slowed me down a tad
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Fun little short-hop commuter car and never mentioned.
- Ken
 
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Those deductions for state taxes amounted to a form of subsidies for those states. It isn't fair and now those states' lawmakers are more accountable for their high taxes, as they should be. The playing field was made more level. If the lack of those deductions cause your taxes to be higher, blame them, not the new federal tax laws. The way to fix that is for them to make their taxes more in line with states with lower taxes.

Just my 2c.
 
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