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If you know your income tax status for 2018, how did you fare? |
Better than last year--I owe nothing |
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10% |
[ 1 ] |
Better than last year--I got a bigger refund |
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0% |
[ 0 ] |
It's a wash--about the same |
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50% |
[ 5 ] |
A little worse than last year--not as much back |
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30% |
[ 3 ] |
A lot worse than last year--I owe more than before |
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10% |
[ 1 ] |
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Total Votes : 10 |
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Howee
Joined: 27 Nov 2009 Posts: 15752 Location: OREGON (in my heart)
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Posted: 03/15/19 9:14 pm ::: Tax Poll: |
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I was not a Happy Camper when I discovered my income tax return was QUITE different from last year.
You?
_________________ Oregon: Go Ducks!
"Inévitablement, les canards voleront"
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GlennMacGrady
Joined: 03 Jan 2005 Posts: 8234 Location: Heisenberg
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Posted: 03/15/19 10:49 pm ::: |
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You can't judge the effect of the new tax law based on refunds. Refunds depend not only on the effective tax rate but by how much one chooses to withhold. For example, if you have a low withholding, you will have a small refund (or owe money) but you will have gotten more money in your paycheck each pay period over the year.
To judge the effect of the new tax law vs. the old, look at your effective tax rates for the two years -- i.e., what percentage of your income did you pay in tax. Even that will not be an accurate indication if your income was significantly different in the two years, because the brackets are progressive.
I haven't looked at my taxes yet, but I'm probably going to do worse because of the cap on the state tax deduction -- state property and income taxes being very high in the People's Republic of Nutmeg. Anyone with any sense would move to Florida. (I'm talking to the Secretary of War.) |
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tfan
Joined: 31 May 2010 Posts: 9663
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Posted: 03/15/19 11:37 pm ::: |
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I heard a tax guy on TV say that the new tax law changed how much was deducted out of people's paychecks - it changed the withholding. That is, he was claiming that less money was withheld this year than in previous years, all things being the same. So people were having to pay this year when they filed their taxes versus previously getting a refund. Although I don't see a reason for why they would change the withholding formula. It gives people more money during the year and then they get hit with having to pay at the end of the year.
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Howee
Joined: 27 Nov 2009 Posts: 15752 Location: OREGON (in my heart)
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tfan
Joined: 31 May 2010 Posts: 9663
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Howee
Joined: 27 Nov 2009 Posts: 15752 Location: OREGON (in my heart)
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pilight
Joined: 23 Sep 2004 Posts: 66996 Location: Where the action is
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jammerbirdi
Joined: 23 Sep 2004 Posts: 21046
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Posted: 03/16/19 11:49 am ::: |
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It was a wash, and that was shocking considering the standard married couples deduction doubled to 24k. That said, it’s still a lot of money. I just don’t understand exactly how that change made no difference in the return. I anticipated losing the state deduction would impact the overall return, but that actually wasn’t a big deal for us. Perplexing, but as this thread attests to, our experience seems to be the norm as opposed to the exception._________________ Every woman who has ever been presented with a career/sex quid pro quo in the entertainment industry should come forward and simply say, “Me, too.” - jammer The New York Times 10/10/17 |
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GlennMacGrady
Joined: 03 Jan 2005 Posts: 8234 Location: Heisenberg
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Posted: 03/16/19 12:52 pm ::: |
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Howee wrote: |
GlennMacGrady wrote: |
You can't judge the effect of the new tax law based on refunds. |
The original question isn't about judging a new tax law. Just...."better" or "worse" on an individual basis. |
My answer was focused on whether it would be better or worse on an individual basis. Refunds are an incomplete measure of betterness/worseness because they are affected by the withholding formula you use. To compare the actual individual effect on you, compare your effective tax rates for the two years on the same amount of income. To be exact about it, compute your tax liability on this year's income using last year's tax methodology, and then compare the results.
The cap on the state and local income tax deduction won't affect you unless that deduction exceeds $10,000 and you used to itemize (which is my case). If you didn't itemize, you benefit from the larger standard deduction and lower bracket rates. However, this is substantially offset by the elimination of the personal exemptions for self, spouse and dependents of $4,050 per person. This all means that many people will have higher taxable income (TI) than last year on the same amount of adjusted gross income (AGI). Whether, for any given taxpayer, this is offset by the lower bracket rates depends upon the relative sizes of their (AGI-TI) difference this year versus last year. |
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jammerbirdi
Joined: 23 Sep 2004 Posts: 21046
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Posted: 03/16/19 2:59 pm ::: |
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GlennMacGrady wrote: |
However, this is substantially offset by the elimination of the personal exemptions for self, spouse and dependents of $4,050 per person. |
So this is probably where the difference went._________________ Every woman who has ever been presented with a career/sex quid pro quo in the entertainment industry should come forward and simply say, “Me, too.” - jammer The New York Times 10/10/17 |
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tfan
Joined: 31 May 2010 Posts: 9663
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Howee
Joined: 27 Nov 2009 Posts: 15752 Location: OREGON (in my heart)
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GlennMacGrady
Joined: 03 Jan 2005 Posts: 8234 Location: Heisenberg
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Posted: 03/16/19 7:24 pm ::: |
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Tfan's link says:
Quote: |
For employees with simpler tax situations, the new tables are designed to produce the correct amount of tax withholding, avoiding over- and under-withholding of tax as much as possible. |
Therefore, it was expected that refunds would be smaller, as would taxes due. |
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PUmatty
Joined: 10 Nov 2004 Posts: 16366 Location: Chicago
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Posted: 03/16/19 7:43 pm ::: |
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All else equal, refunds are bad. They mean the government is holding your money without paying you interest. You are better putting that money aside yourself and earning interest on it and then paying it at the last possible minute.
Interest rates are low enough now that it doesn't make a big difference, but with higher interest on large tax bills, it can be noteworthy.
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Ex-Ref
Joined: 04 Oct 2009 Posts: 8959
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