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Thread: A tax question

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    Very Active Member Rogue Hawk's Avatar
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    Default A tax question

    Now please, don't let this turn into political pandemonium. It is strictly a finance question.

    I have been lead to believe we got a federal tax cut. But yesterday while doing my taxes I noticed the individual deduction was removed. So the government guy is handing us money at the same time another one picks our pocket. So my question is, when it all come down to the bottom line, did we get a tax cut?
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    Very Active Member ARtraveler's Avatar
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    Yup! I went from two years of $1,100 refunds to owing $680 this year. The tax cut did not work for me. No great changes to my finances either.

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    Very Active Member JerryB's Avatar
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    Hi Rogue Hawk,

    Re: did we get a tax cut?

    In a word: No

    Jerry Baumchen
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    'Things are more like they are now than they ever have been before.' Dwight Eisenhower

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    Yes, you got the best tax cut ever from the most beautiful tax legislation ever passed and it was all done in record time by the most fabulous administration that has ever resided in the WH. LOL This will probably be pulled.

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    Very Active Member Rogue Hawk's Avatar
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    Quote Originally Posted by akspyderman View Post
    Yup! I went from two years of $1,100 refunds to owing $680 this year. The tax cut did not work for me. No great changes to my finances either.
    Yes, this is the first time in all the years I have been filing taxes I end up owing money. The tax guy I go to said many people are in the same boat.
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    Member glorybiz's Avatar
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    you should check your payroll deductions for exemptions. I found mine had changed from 0 to 1, so while I was getting more money in my paycheck, I ended up having to pay $900 instead of getting a refund
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    Quote Originally Posted by Rogue Hawk View Post
    So the government guy is handing us money at the same time another one picks our pocket.

    So my question is, when it all come down to the bottom line, did we get a tax cut?
    Nothing new with that first statement.

    Yes, my income was almost exactly the same and my total tax was less.

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    Quote Originally Posted by akspyderman View Post
    Yup! I went from two years of $1,100 refunds to owing $680 this year. The tax cut did not work for me. No great changes to my finances either.
    That probably has more to do with the withholding tables than with the actual tax rates.
    Was the total tax owed more or less this year ?

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    Very Active Member wyliec's Avatar
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    Quote Originally Posted by akspyderman View Post
    Yup! I went from two years of $1,100 refunds to owing $680 this year. The tax cut did not work for me. No great changes to my finances either.
    I too didn't have any great changes to my finances; but, I went from owing around a $1000 in years past to the feds owning me $69.

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    We always claim "0" and add to our deductions so we never end up owing, and we always get a refund. However this year our refund will be smaller by several hundred dollars. So in short, we did not see a tax cut.

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    Very Active Member ARtraveler's Avatar
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    I made no changes to my withholdings, so enjoyed a little bit extra each pay period. Now...it does not matter. No more employment income.

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    Very Active Member IdahoMtnSpyder's Avatar
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    For me, there was no real tax cut. My gross taxable income dropped by about $11,000 and my total tax owed dropped about $1,200, which is about what my incremental tax rate is. I went from over $30,000 in deductions plus exemptions in 2017 to $26,600 standard deduction. One thing that helped is I took some of my Mandatory Required Distribution from an IRA as a Qualified Charitable Deduction to my church. Had I not done that I would have been stung by several hundred dollars.

    If you have to take an RMD out of an IRA, and like to donate to charity, check out the QCD option. Your donation does not count as income to you, but it satisfies the RMD.

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    Very Active Member IdahoMtnSpyder's Avatar
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    Quote Originally Posted by glorybiz View Post
    you should check your payroll deductions for exemptions. I found mine had changed from 0 to 1, so while I was getting more money in my paycheck, I ended up having to pay $900 instead of getting a refund
    I don't know if the change in withholding was a blatant move by the administration to stealthily glorify the supposed tax cut, or a gross miscalculation by them as to what the net result would be for most people. Either one is plausible IMO.

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    Mine went down. My tax rate fell, and I got a small refund. Don’t look at refund size. If you withheld too much, you get a big refund of your own money. Look at the tax rate, and look at deductions. Then adjust your withholding accordingly.
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    Lot's of folks complaining about their tax refunds this year because they didn't notice that their monthly take home pay bumped up. They enjoyed getting more monthly or twice monthly checks, but now are not happy that they ended up owing a bit. My wife's the office manager/bookeeper for a local company and really paid attention to the withholding change and adjusted ours appropriately. We got more back this year than last. She's getting a new Yamaha SMAX to replace her 11 year old C3.
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    Default Taxes

    Taxes seem to Always have the bad Deal. Nobody wants to pay them, but everyone enjoys the Benefits. HAVE A NICE WEEKEND....
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    Quote Originally Posted by 2dogs View Post
    However this year our refund will be smaller by several hundred dollars. So in short, we did not see a tax cut.
    WHY......do SO many people try to measure their taxes by the amount of refund they get ?????

    Those are two different things.

    Compare the total tax owed from multiple years returns.

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    Quote Originally Posted by Easy Rider View Post
    WHY......do SO many people try to measure their taxes by the amount of refund they get ?????

    Those are two different things.

    Compare the total tax owed from multiple years returns.
    Yup. That's the true apples-to-apples bottom line.
    Bert


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    Quote Originally Posted by newbert View Post
    Yup. That's the true apples-to-apples bottom line.
    For me, a perfect situation is to have NO refund and OWE no tax at the end of the year. That means I am paying the appropriate amount for my income as I go..... The only way to determine tax increase/reduction is to look at total GROSS income and total tax paid year over year. If your income changes significantly, your tax bracket will too. Other events and personal changes, such as retirement, RMD, deductions, ETC. will have an effect tax liability. The amount of tax owed or refund due is only one component of your actual tax liability. It does not reflect reality..... Jim
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    Not wanting to insult anybody here but the same people who "measure" their taxes by the amount of their refund probably are the same ones who think they got a great deal on a new car.........because their monthly payments are so low.

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    Very Active Member ARtraveler's Avatar
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    Happily, not all of us. For instance, mine were just comparisons with the previous two years. Most years prior, I had to pay. And most people on here are smarter than you think.

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    Quote Originally Posted by akspyderman View Post
    And most people on here are smarter than you think.
    Maybe. But as time goes along, it is becoming painfully obvious that people in general are WAY more stupid than I had ever imagined.

    Won't go into why......because that is way off topic.

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    Very Active Member Rogue Hawk's Avatar
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    I changed my deduction to 0. They are withholding less. It created an allusion that we got a better cut than we actually did.
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    According to Motley Fool, the tax rates have been lowered and the standard deduction has been almost doubled, but the personal exemption has been eliminated. For a married couple filing jointly in 2017, two exemptions x $4150 plus $13K standard deduction meant that $21,300 would be excluded from tax. For 2018, there would be a straight $24,000 standard deduction. Therefore if you are in this situation (as many of us are), you would actually be $2700 better off, plus presumably lower tax rates as well.

    As always, you can benefit from itemizing deductions if you have more itemized deductions than the standard deduction. However, since in my example the standard deduction is now $24,000 for married filing jointly versus $13,000 last year, this means that many people will now be unable to itemize. In addition, there are more limitations on what can be itemized.

    Self-employed persons with "pass-through income" (sole proprietorships, LLCs, partnerships, and S corporations) get to deduct 20% of their income off the top. Quoting Motley Fool, "In other words, if you own a small business and it generates $100,000 in profit in 2018, you'll be able to deduct $20,000 of it before the ordinary income tax rates are applied." If you are a doctor or other self-employed professional who earns a lot of money, this is huge. Any time you can deduct 20% of your income off the top, that's a huge tax break. In addition, the child tax credit now is available to persons who have up to $400,000 in income, whereas previously it phased out at $110,000. I expect sales of Mercedes-Benz and yacht sales to increase substantially.

    One reason why you might get a smaller refund and/or might owe money would be the fact that the tax withholding rates were reduced last year. Withholding is NOT the same as your tax, it's just an estimate. If less money was withheld, you got more money in your paycheck during the year but of course that means your refund may be smaller when you actually file. Or you may owe, too.

    https://www.fool.com/taxes/2017/12/2...x-changes.aspx
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    Very Active Member wyliec's Avatar
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    Quote Originally Posted by Rogue Hawk View Post
    I changed my deduction to 0. They are withholding less. It created an allusion that we got a better cut than we actually did.
    I guess you'll have to forego the new lunch box, currently.

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