Taxes?

[fredtoast]

(02-11-2019, 03:48 PM)StrictlyBiz Wrote: I did mine over the weekend and my effective rate fell from 23.5% last year (I guessed wrong above) to 17.9% this year. 

That was not just due to the new tax code.

Did you have a massive reduction in income or did you file under a different category than last year?

From what I have seen most people will pay less, but their effective rate will not drop by 25%.

[StrictlyBiz]

(02-11-2019, 04:25 PM)fredtoast Wrote: That was not just due to the new tax code.

Did you have a massive reduction in income or did you file under a different category than last year?

From what I have seen most people will pay less, but their effective rate will not drop by 25%.

Its 100% due to the tax code. We were remarkably consistent from 2017. MFJ both years. Total income was within a few thousand dollars. Taxable income was within $1500. In '17 we itemized and deducted just under 24K, last year we took the standard deduction of 24K. I even make quarterly estimated's and in total they were within $1000 from year to year. Total tax dropped significantly, thus the larger refund. 

[StrictlyBiz]

Plugged both years into this calculator and tax due was consistent with my returns.

https://www.taxact.com/tools/tax-bracket-calculator

[Benton]

Minus about $1800 in cashing out some investments early, my tax bill went from a few hundred refund to owing $5,500. With the investments (which we planned for) the total owed is $7,300.

Thanks Obama.

[fredtoast]

(02-11-2019, 06:43 PM)StrictlyBiz Wrote: Its 100% due to the tax code. We were remarkably consistent from 2017. MFJ both years. Total income was within a few thousand dollars. Taxable income was within $1500. In '17 we itemized and deducted just under 24K, last year we took the standard deduction of 24K. I even make quarterly estimated's and in total they were within $1000 from year to year. Total tax dropped significantly, thus the larger refund. 

None of the brackets dropped as much as 6% and you claim the deductions were the same.

So I don't see how your tax bill could have dropped by over 6%.  The bracket ranges were adjusted some, but I still don't see the 6% drop.

But I am not going to get into the full accounting to dispute it here.  Maybe there is something I am missing.

[StrictlyBiz]

(02-18-2019, 07:12 PM)fredtoast Wrote: None of the brackets dropped as much as 6% and you claim the deductions were the same.

So I don't see how your tax bill could have dropped by over 6%.  The bracket ranges were adjusted some, but I still don't see the 6% drop.

But I am not going to get into the full accounting to dispute it here.  Maybe there is something I am missing.

Total tax owed dropped by almost 25% from 2017 to 2018 with all of the numbers remaining pretty much the same.

[fredtoast]

(02-19-2019, 02:53 PM)StrictlyBiz Wrote: Total tax owed dropped by almost 25% from 2017 to 2018 with all of the numbers remaining pretty much the same.

And that seems strange because the rates did not go down that much.

But like I said, maybe I am missing something.

[StrictlyBiz]

(02-19-2019, 03:09 PM)fredtoast Wrote: And that seems strange because the rates did not go down that much.

But like I said, maybe I am missing something.

Thats because the rate that each bracket was reduced does not equal the rate amount that you will save. 

Follow this chart

https://www.gpwa.com/wp-content/uploads/2018/01/Individual-and-Corporate-Tax-Rates.pdf

Lets assume that a couple MFJ and made $233,000 in both 2017 and 2018. In 2017 their total tax would be $29,752 and they would be in the 28% bracket (4th bracket). 

In 2018, they're still in the 4th bracket (now 24%), but in the middle of it and not the top. For the first 3 brackets they owe $8,907 and another $16,320 for the portion of the 4th bracket that their income falls into. Total tax due for 2018 is $25,227. 

Their total savings from 2017 to 2018 is $4525. This represents a 15.2% savings from the previous year even though the percentage drop of their brackets was 0%, 3%, 3%, and 4% respectively. 

[fredtoast]

(02-19-2019, 07:03 PM)StrictlyBiz Wrote: Thats because the rate that each bracket was reduced does not equal the rate amount that you will save. 

Follow this chart

https://www.gpwa.com/wp-content/uploads/2018/01/Individual-and-Corporate-Tax-Rates.pdf

Lets assume that a couple MFJ and made $233,000 in both 2017 and 2018. In 2017 their total tax would be $29,752 and they would be in the 28% bracket (4th bracket). 

In 2018, they're still in the 4th bracket (now 24%), but in the middle of it and not the top. For the first 3 brackets they owe $8,907 and another $16,320 for the portion of the 4th bracket that their income falls into. Total tax due for 2018 is $25,227. 

Their total savings from 2017 to 2018 is $4525. This represents a 15.2% savings from the previous year even though the percentage drop of their brackets was 0%, 3%, 3%, and 4% respectively. 

You are not reading the chart correctly.

233,350 in 2017 equals 52,222 in taxes.  That is an effective rate of 22.3
233,350 in 2018 equals 44,583* in taxes.  That is an effective rate of 19.1


*28,179 + [.24 x (233,350 - 165,000)]

So the effective rate only drops 3.2 percentage points.

[fredtoast]

(02-11-2019, 06:57 PM)StrictlyBiz Wrote: Plugged both years into this calculator and tax due was consistent with my returns.

https://www.taxact.com/tools/tax-bracket-calculator

Try this and you will see.  Effective tax rate on 233,350 only drops 3.2 percentage points from 2017 to 2018.

[Aquapod770]

(02-04-2019, 12:27 PM)jj22 Wrote: Anyone done their taxes yet? I am coming up $1200.00 shorter than what I did in the prior 6 years. I'm going to have to go to a tax specialist because something isn't right. Is it the new tax law? I know the middle class is hurt by it, but I didn't realize it was this bad? Anyone else do their taxes yet? Anyone else coming up massively short?

I am stunned. I might as well not even file.

Most likely you're not coming up 1200 shorter. Withholding was reworked as well. Paid less through the year on each paycheck. This is what is happening and most people are freaking out about their smaller returns thinking they paid more in taxes. If you have your return from last year you can compare to see if you're actually paying more, or just got a smaller return because less was taken from you compared to previously. 

[Aquapod770]

(02-04-2019, 08:01 PM)Crazyjdawg Wrote: Trump's tax bill simplified taxes but it also removed a lot of things that helped people who itemized.

From what I can tell the general consensus is:
If you took the standard deduction each year, you're happy.
If you itemized, you're pissed.

If you itemized enough to get over the $12,000 (for a single filer) then you're probably in a high enough tax bracket that the left thinks you need to be paying more anyway 

[Benton]

(02-19-2019, 10:14 PM)Aquapod770 Wrote: If you itemized enough to get over the $12,000 (for a single filer) then you're probably in a high enough tax bracket that the left thinks you need to be paying more anyway 

If the new norm is me paying five grand every year so someone can have a "free" corporate jet, then I quit. What's the friggin point of trying to earn a living if they're just going to take it all in taxes?

[*bfine32*]

I just wish we'd go to a flat tax and be done with it. But I've got a feeling that many currently blaming the rich for their tax breaks would not be happy, while the rich would be ecstatic.

[Benton]

(02-19-2019, 11:40 PM)bfine32 Wrote: I just wish we'd go to a flat tax and be done with it. But I've got a feeling that many currently blaming the rich for their tax breaks would not be happy, while the rich would be ecstatic.

Flat tax in place of what?

Sales? Property? Capital? Usage?

There's a variety of state/local/ federal taxes. If you're thinking get rid of all and have a flat tax, then it would most likely be extremely high, and, yeah, would mostly benefit those who are already wealthy . 

[*bfine32*]

(02-20-2019, 01:15 AM)Benton Wrote: Flat tax in place of what?

Sales? Property? Capital? Usage?

There's a variety of state/local/ federal taxes. If you're thinking get rid of all and have a flat tax, then it would most likely be extremely high, and, yeah, would mostly benefit those who are already wealthy . 

Nothing wrong with keeping all the taxes you mentioned as long as they're flat. I went out to eat tonight and before they added the taxes to my meal they didn't ask for a W2.

I was simply referring to income tax, sorry I didn't make that clear. But we agree that all those rich folks getting all these "tax breaks" would absolutely love a flat tax. Apply it to whatever you choose.

[StrictlyBiz]

(02-19-2019, 07:44 PM)fredtoast Wrote: You are not reading the chart correctly.

233,350 in 2017 equals 52,222 in taxes.  That is an effective rate of 22.3
233,350 in 2018 equals 44,583* in taxes.  That is an effective rate of 19.1


*28,179 + [.24 x (233,350 - 165,000)]

So the effective rate only drops 3.2 percentage points.

You are right, I looked at the wrong line. But my point is still the same. 

Total tax savings 2017 vs 2018 is $7639 or a 14.6% savings (less tax due). 

[*michaelsean*]

Looks like I'm going to owe about $2400. Last year I got back maybe a thousand, but I can pretty much lay this at the feet of my wife's new job that she took in July. They withheld a whopping 11%. So now I don't really know how the new tax laws affected me.

[Belsnickel]

So I did my taxes this past weekend. Nothing really changed in 2018 from 2017, except my refund being about $400 less. It'll be interesting when I do my taxes next year because of the salary change and being a homeowner. Is it sad I'm a little excited about it?

I also got irritated because I did my father-in-law's taxes. Not only is his AGI in retirement like $80k (mostly pensions and such, very little from his IRA), but he overpays his taxes way too much and is getting a $7k refund. He has also made some dumb decisions with his taxes in the past, always filing late, so I wasn't able to efile his. Hopefully me doing everything as it should be done this year will mean I can efile next year for him.

[*michaelsean*]

(02-28-2019, 12:32 PM)Belsnickel Wrote: So I did my taxes this past weekend. Nothing really changed in 2018 from 2017, except my refund being about $400 less. It'll be interesting when I do my taxes next year because of the salary change and being a homeowner. Is it sad I'm a little excited about it?

I also got irritated because I did my father-in-law's taxes. Not only is his AGI in retirement like $80k (mostly pensions and such, very little from his IRA), but he overpays his taxes way too much and is getting a $7k refund. He has also made some dumb decisions with his taxes in the past, always filing late, so I wasn't able to efile his. Hopefully me doing everything as it should be done this year will mean I can efile next year for him.

You gotta hit over $24,000 in deductions to make the itemized worth it.  I had to battle turbo tax. They kept trying to get me to put in all my deductions when I knew damn well I wouldn't reach $24,000 so I ended up putting in zeroes for everything.