My Federal Tax Cut for 2018

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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
smile.gif


No, not a new one.......

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

Oooo. You just gave me an idea. Maybe I'll start looking now while the snow and ice are still flying. No garage though.
 
I have heard similar from a few, they did not get as big a refund as they thought they should have or ended up having to pay when they never did in the past, and thought they got screwed, but then when they actually went back and looked at their paychecks, they saw they were paid more each check that the previous year even with no raise.

I got less of a refund this year than past years, but also know I had more take home pay as well.
 
We have to realize that the refund is based on the amount of withholding.
If there is less withholding, then the refund will be less.

Common sense that is "uncommon".

We have to calculate the percentage as stated in the thread.
the tax liability over the total Adjusted Gross Income times 100%.

At any rate, less withholding is better because we have more spendable income or put it into saving as supposed to lending it to the government.
Unfortunately, our mind have been programmed to get the refund instead of keeping more.
 
Got my own home, got a home for my inlaw to live in, dual income middle class, due to SALT my tax had massively increase.

Every kind of tax and deduction is a subsidize, I understand that. What I have a sour feeling is that some are getting more subsidizes that me now than in the past, so that's human nature, and that's how democracy work I guess.
 
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people crying because their refund was smaller didnt see that their paycheck went up $20 per week either.

So if they paid 1000$ less in why should a tax cut make a bigger refund??

My refund would have been actually smaller. because of getting more out of my paycheck every week.

but I changed my withholding
 
Originally Posted by Rand
people crying because their refund was smaller didnt see that their paycheck went up $20 per week either.

So if they paid 1000$ less in why should a tax cut make a bigger refund??

My refund would have been actually smaller. because of getting more out of my paycheck every week.

but I changed my withholding


Back in the early part of last year (2018) when the payroll changes went into effect, people on the reddit personalfinance forum were asking why they are suddenly making more money, and the biased moderation of that site REFUSED to let it be known that tax cuts were responsible.

That is just absurd. Every person and every thing in life is capable of doing good and doing bad. We should all be able to thumbs up when someone does something good for us.
 
Someone played with the withholding. I don't know enough to know if that's something that gets mandated at the federal level or something that all of the payroll companies have to do.

I definitely paid less in taxes than last year. I had to pay in a bit, however. I think that's throwing a lot of people off - they may not have noticed ( or have not put two and two together ) the larger paychecks and then blame the smaller refund on higher taxes.

I am on the lower end of middle class. Have mortgage interest, property tax and student loans. Obviously, after last year's changes, the property tax and mortgage interest can't be deducted(itemizing). In my case, the increase in the standard deduction more than makes up for the loss of mortgage interest and property taxes.
 
In Maine if I wrote my state income taxes off my feds last year, they recapture it this year. Round and round the loop goes. I keep it simple and just never do it.

The feds will be sending me a decent chunk, but the state's getting that and then some. Usually I owe them both.

Couple kids, house paid off, standard deductions, decent pay, occasional OT (that gets withheld at a high rate).

My withholding changed by under a couple bucks a check this time last year.
 
Originally Posted by ARCOgraphite


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


I am not sure how you are calculating YOY, but the tax reduction for the brackets up to about $160K was generally 3% or less.
 
i feel like i paid a lot less taxes this year....

2017 me/wife/1 kid, made 128k, 14k withheld and got 2k refund , so paid 12k taxes on 128k income (9.4% effective rate)

2018 me/wife/2 kids made 120k, 11k withheld got 3k refund, so paid 8k taxes on 120k income (6.7% effective rate)

actual taxes paid for federal was $4390 less than last year

Itemized both years, this year had 14k SALT=10k plus 10k mortgage interest plus charitable contributions.

unless the extra 1 kid makes that much difference?
 
Originally Posted by Brybo86
i feel like i paid a lot less taxes this year....

2017 me/wife/1 kid, made 128k, 14k withheld and got 2k refund , so paid 12k taxes on 128k income (9.4% effective rate)

2018 me/wife/2 kids made 120k, 11k withheld got 3k refund, so paid 8k taxes on 120k income (6.7% effective rate)

actual taxes paid for federal was $4390 less than last year

Itemized both years, this year had 14k SALT=10k plus 10k mortgage interest plus charitable contributions.

unless the extra 1 kid makes that much difference?




Now the key for you is to rework your W2 so you can take that $3000 during the year and add to your tax deferred accounts if you can.
 
Just did our taxes a few weeks ago, we made a little more than last year and paid a little less in taxes. Nothing earth shattering and status quo. If I didn't compare the 2017 and 2018 returns I never would have noticed.
 
Originally Posted by JeffKeryk
Originally Posted by ARCOgraphite


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


I am not sure how you are calculating YOY, but the tax reduction for the brackets up to about $160K was generally 3% or less.

You're talking about 3% of taxable income, he's talking about 19% of taxes.
 
Originally Posted by MrMoody
Originally Posted by JeffKeryk
Originally Posted by ARCOgraphite


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


I am not sure how you are calculating YOY, but the tax reduction for the brackets up to about $160K was generally 3% or less.

You're talking about 3% of taxable income, he's talking about 19% of taxes.

Understood. I am simply curious how that worked out.
How a max of 3% in tax rate results in a 19% reduction in tax burden.
 
Originally Posted by JeffKeryk
How a max of 3% in tax rate results in a 19% reduction in tax burden.

A little algebra comes to: old rate = 15.79%, new rate = 12.79%. 12.79 / 15.79 = .81, a 19% reduction in rate, and a 19% reduction in tax no matter the amount taxed.
 
Originally Posted by JeffKeryk
Originally Posted by MrMoody
Originally Posted by JeffKeryk
Originally Posted by ARCOgraphite


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


I am not sure how you are calculating YOY, but the tax reduction for the brackets up to about $160K was generally 3% or less.

You're talking about 3% of taxable income, he's talking about 19% of taxes.

Understood. I am simply curious how that worked out.
How a max of 3% in tax rate results in a 19% reduction in tax burden.


Because there is more than just decreases in marginal tax rates that determine each persons' effective tax rate.
 
Originally Posted by IndyFan
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.


My property tax in NY is around $16,000. In DE it's about $1000 for a house worth a little less but not night and day. So I cannot even deduct the full local property tax much less the NYS income tax my wife and I pay.

My real concern is that it's hard to absorb this change in 1 year. Phase it in or grandfather it in. Should I rush out and sell my house because I can no longer deduct all my SALT? In a few years I suspect this tax bill will be repealed or significantly changed.
 
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