Year 2 of the New Tax Law - Impacts to you. (1 Viewer)

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wardorican

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We had a thread about this in a prior incarnation, I may include some information from it later.

It's early tax filing season, so we should get to see some more data about how your overall taxable income has changed from 2017, to 2018, to 2019, as well as refunds (we know refunds dropped a lot, but overall taxable income mostly went down, but there have been exceptions).

I'm not quite done filling out my taxes. Luckily, we have some education credits to help us out that I haven't put in yet, otherwise, so far, it would't look good for us. I believe 2019 should be a bit worse of a tax year than 2018, since there was a tax break decay every year, until it goes away, if I recall correctly.

Only share what you're comfortable with. I'd like this to remain more about the facts as they come in, but I'm sure as we get data, opinions will come in.
 
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wardorican

wardorican

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This is what I posted for 2018's tax year.

Well, I haven't filed my taxes yet, but I've pretty much put them in and I know what I earned, what I paid, what I owed, and what I'm getting back. And I'll preface by saying we take the Standard Deduction, this year and last.

So, for 2018, I saved a grand total of $772 in taxes compared to 2017. I guess it would have been more, if the oldest wasn't 17 for the tail end of 2018.

Our AGI was about $3700 more than the previous year. Still same bracket.

However, our Taxable Income shot up by about $8600 with the Standard Deduction (no more exemptions for dependents)

We had about $2000 less withheld (so, some people may end up owing, if they don't have kids) compared to last year.

The credits were about 500 more than last year.

the taxes owed before credits was $200 less than last year, so that's what I'd look forward to without kids.

Now, I'm not sure if we qualify for anything with my wife going back for her Masters, so I'm waiting on that. However, that's also not standard.

But, with kids, we got $772 extra.. Thanks Trump.

When the kids age out, we'd have gotten just over $200. Thanks Trump.

Doesn't seem like much. Pays for the Internet, I guess.
This was in reply to someone thinking I was complaining about a smaller refund.. and that wasn't my point at all.

You're missing my point. I don't care if I get a $1 refund. The refund doesn't matter. I'm with you, I'd much rather have more income during the year than get a bunch owed back.

I'm just talking about the difference in my overall tax burden from last year to this year.

So, my tax burden, was $772 less than 2017. i.e. the tax law gave me an extra $772. That was not my refund.

When my kids age out, that may drop down to $200. And I believe every year the tax relief gets a little less, so it will possible drop to nothing.

The issue I have, and we will see with more data, is that higher income earners will save a lot more in taxes. Not even linearly. i.e. if they make double than what I do, they'll save more than double the taxes. That's not right, and it's against the whole point of a progressive tax system (not political progressive, progressive as in it progresses each step). Also, remember this was sold as a big tax relief for the middle class. I am, by exact definition, middle class. This was relief, but I wouldn't characterize it as big.

I'm also following up with what I was predicting in 2017 when the details came out. I'm just providing data. Read over post 868 and the quotes, and you'll get it.
One kid is 18, the other is still young enough, so we'll see...
 

JimEverett

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How does the tax law allow someone who is in a higher tax bracket and makes double what you make get more than double the refund? Do you mean that can happen with certain deductions/credits or that it happens as a matter of rule or something?
 

RegularChuck

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My income and income sources has changed way too much over the past couple of years to really share how it has affected me.

I will say that the people in power intentionally make the tax changes for normal folks income complex enough so we quibble over whether or not the changes are good for us, all while being sure that the rich definitely come out better.
 

xpuma20x

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I just want to post this here so I can come back after doing my taxes this year and see the difference. These are off the top of my head, but fairly close iirc. Single male, no children, now 41 years old. Have no additional incomes or money stashed away that would affect anything.

2018 - I received back about $450.
2019 - My salary went up only around $500 for the year (yay public education life) but I had to pay out $550 even though I changed nothing.
2020 - My salary will once again go up $500 from the 2018-2019 year. Once again I changed nothing.

I'll reply to myself to see the difference once my taxes are finished.
 
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wardorican

wardorican

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How does the tax law allow someone who is in a higher tax bracket and makes double what you make get more than double the refund? Do you mean that can happen with certain deductions/credits or that it happens as a matter of rule or something?
I"m not sure if that part is true.. it was me explaining what I meant by non-linearly. I do think the benefit is more apparent at higher wages. When I looked at the early calculators in 2017 it seemed to play out that way. But, I'd have to dig for that again. So, feel free to consider that one sentence as questionable. However, I was meaning the tax savings from 2018 compared to 2017. A higher % benefit to the cuts.

If I get time tonight or this weekend, I'll look at the old thread where I was using an online calculator when the tax laws were being voted on. Or I'll use something more appropriate if updated since then.
 
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wardorican

wardorican

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I just want to post this here so I can come back after doing my taxes this year and see the difference. These are off the top of my head, but fairly close iirc. Single male, no children, now 41 years old. Have no additional incomes or money stashed away that would affect anything.

2018 - I received back about $450.
2019 - My salary went up only around $500 for the year (yay public education life) but I had to pay out $550 even though I changed nothing.
2020 - My salary will once again go up $500 from the 2018-2019 year. Once again I changed nothing.

I'll reply to myself to see the difference once my taxes are finished.
Just remember to consider overall tax burden, vs just refund.
 

Nebaghead

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My ignorance shows, mind explaining this a bit more for me?
Look at how much Federal Tax you paid. Refund is based on how much they took out of your pay check. I don't get much of a refund because I set the amount pretty close to what I expect to pay out.
 
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wardorican

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My ignorance shows, mind explaining this a bit more for me?
I'll get you tonight, if you need an example.

But, basically, when you file your taxes, you find out what your tax liability is.. how much you owed for the whole year, after deductions and credits... Then, you look at how much you already paid (from payroll taxes). The difference is how much you are owed as a refund, or how much you owe as a payment.

If you get a refund.. that is one value (that we all like). But, the Tax liability (how much total for the year you owed.. not what you paid) is what really matters.

i.e. you can have a much smaller refund, but your overall tax liability is a lot lower, so each check, you kept more money.. because of that, they don't owe you as much back. But, if you add up how much you saved each check, plus your refund, it's how much money you gained.

So, you can look at it as how much your liability (tax) dropped, or how much new money you gained (refund, plus increase in paychecks due to tax changes).

HR Block has an easy summary sheet when you e-file with them. I'd just rather now show all of my numbers.
 

JRad

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My refund was $925, up from last year. I’m currently replying with almost useless feedback to remind myself to get the actual 2018/2019 numbers later.
 
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wardorican

wardorican

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Ok, I need to wait on one more official tax document, but I know what the numbers are going to be, so I put them in to estimate my 2019 taxes. I was curious. I still need to go throught it all once more, just to make sure I didn't screw up.

So, 2018 and 2019 should compare pretty well.

our AGI was almost the same, actually about 280ish less than last year. Which, confuses me a bit, because my wife made more, and I made a touch more.

Due to some extra deductions this year (student loan interest), our taxable income dropped about $680. So, that's due to circumstances.

However, our "total tax", prior to credits, only dropped $305.

our credits went down (only the kid and now one dependent, since he's 18). I guess the tuition wasn't enough to go with the credit and made more sense as a taxable income deduction (all through the software)..

Because of that, our Tax After Credits, actually went up $240.

We had a slight bit more taxes witheld all year (due to slight increase in wages).

Refund was $28 less than last year. So, same ballpark.

Due to the Tuition and loan interest stuff, it's harder to compare to 2017, prior to the change. But, it would mean, 2019 compared to 2017 (when both kids were young enough for the credit), I saved a total of $532 extra in taxes this year. Meaning, the $532 is rough idea of what the TCJA did for me; About $44/month. Thanks Trump. that covers about 2/3rd of my cell phone bill (for just my phone).

When the youngest ages out, we'd owe money, which would likely wipe out any tax savings from before the TCJA, or actually we'd be worse off. And we never have been able to deduct property taxes, etc.
 

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Alrighty, I'm pulling these from the tax transcripts:
2017: $9190 withheld, $845 refund - $8345
2018: +$2488 income, $8209 withheld, $989 refund - $7220
2019: +$5785 income (over 2018), $9296 withheld, $925 refund - $8371

My pay changing makes it a bit difficult (at least for me) to see if there was any actual benefit. But off the cuff, I had $1151 more in liability from a $5785 increase in pay. I just use standard deductions, single/no kids.

My position changed in December 2018, so that's why there's a jump in 2019.
 

xpuma20x

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Any of you tax gurus know the formula I would need to use for this scenario:

The last couple of years I've paid around $500-600 in extra taxes. I would like to instead add more monthly to my 403b (or whatever it's called for my secondary teaching retirement).

I know that its not going to be as simple as just adding another $50 a month (600/12) due to tax brackets and all that nonsense. Does anyone know how to sort this out?
 
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wardorican

wardorican

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Any of you tax gurus know the formula I would need to use for this scenario:

The last couple of years I've paid around $500-600 in extra taxes. I would like to instead add more monthly to my 403b (or whatever it's called for my secondary teaching retirement).

I know that its not going to be as simple as just adding another $50 a month (600/12) due to tax brackets and all that nonsense. Does anyone know how to sort this out?
Short of you being $600 away from a bracket edge, which only applies to that $600 over the bracket amount, which amounts to just a few bucks.. it pretty much is as easy at just socking an extra $50/month away.
 

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