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Tax Poll:

 
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If you know your income tax status for 2018, how did you fare?
Better than last year--I owe nothing
10%
 10%  [ 1 ]
Better than last year--I got a bigger refund
0%
 0%  [ 0 ]
It's a wash--about the same
50%
 50%  [ 5 ]
A little worse than last year--not as much back
30%
 30%  [ 3 ]
A lot worse than last year--I owe more than before
10%
 10%  [ 1 ]
Total Votes : 10

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Howee



Joined: 27 Nov 2009
Posts: 11650
Location: Oklahoma (in my heart), whilst on my way to Oregon!


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PostPosted: 03/15/19 9:14 pm    ::: Tax Poll: Reply Reply with quote

I was not a Happy Camper when I discovered my income tax return was QUITE different from last year.

You?



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GlennMacGrady



Joined: 03 Jan 2005
Posts: 5253
Location: Heisenberg


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PostPosted: 03/15/19 10:49 pm    ::: Reply Reply with quote

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.)
tfan



Joined: 31 May 2010
Posts: 7112



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PostPosted: 03/15/19 11:37 pm    ::: Reply Reply with quote

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.


Howee



Joined: 27 Nov 2009
Posts: 11650
Location: Oklahoma (in my heart), whilst on my way to Oregon!


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PostPosted: 03/16/19 12:06 am    ::: Reply Reply with quote

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.

tfan wrote:
That is, he was claiming that less money was withheld this year than in previous years, all things being the same.

Understandable. But....in my case I changed no income nor withholding data, and still got zapped. Shocked

NOW, maybe we can talk about the new tax law.



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tfan



Joined: 31 May 2010
Posts: 7112



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PostPosted: 03/16/19 12:25 am    ::: Reply Reply with quote

Howee wrote:


tfan wrote:
That is, he was claiming that less money was withheld this year than in previous years, all things being the same.

Understandable. But....in my case I changed no income nor withholding data, and still got zapped. Shocked


That is what was being claimed by the tax guy - people who didn't change income or withholding data - had their withholding amounts go down due to something that was in the tax law.


Howee



Joined: 27 Nov 2009
Posts: 11650
Location: Oklahoma (in my heart), whilst on my way to Oregon!


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PostPosted: 03/16/19 10:18 am    ::: Reply Reply with quote

tfan wrote:
Howee wrote:


tfan wrote:
That is, he was claiming that less money was withheld this year than in previous years, all things being the same.

Understandable. But....in my case I changed no income nor withholding data, and still got zapped. Shocked


That is what was being claimed by the tax guy - people who didn't change income or withholding data - had their withholding amounts go down due to something that was in the tax law.


And what 'tax guy' are you referring to? And why/how could that happen without my consent? Shocked



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pilight



Joined: 23 Sep 2004
Posts: 58141
Location: Where the action is


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PostPosted: 03/16/19 10:28 am    ::: Reply Reply with quote

Howee wrote:
tfan wrote:
Howee wrote:


tfan wrote:
That is, he was claiming that less money was withheld this year than in previous years, all things being the same.

Understandable. But....in my case I changed no income nor withholding data, and still got zapped. Shocked


That is what was being claimed by the tax guy - people who didn't change income or withholding data - had their withholding amounts go down due to something that was in the tax law.


And what 'tax guy' are you referring to? And why/how could that happen without my consent? Shocked


They altered the amount being withheld per dependent claimed.

The cap on state/local tax deductions has most middle class households paying more in taxes.



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jammerbirdi



Joined: 23 Sep 2004
Posts: 19825



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PostPosted: 03/16/19 11:49 am    ::: Reply Reply with quote

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.



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GlennMacGrady



Joined: 03 Jan 2005
Posts: 5253
Location: Heisenberg


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PostPosted: 03/16/19 12:52 pm    ::: Reply Reply with quote

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.
jammerbirdi



Joined: 23 Sep 2004
Posts: 19825



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PostPosted: 03/16/19 2:59 pm    ::: Reply Reply with quote

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.



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tfan



Joined: 31 May 2010
Posts: 7112



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PostPosted: 03/16/19 3:42 pm    ::: Reply Reply with quote

Howee wrote:
tfan wrote:
Howee wrote:


tfan wrote:
That is, he was claiming that less money was withheld this year than in previous years, all things being the same.

Understandable. But....in my case I changed no income nor withholding data, and still got zapped. Shocked


That is what was being claimed by the tax guy - people who didn't change income or withholding data - had their withholding amounts go down due to something that was in the tax law.


And what 'tax guy' are you referring to? And why/how could that happen without my consent? Shocked


Some tax accountant I saw on the 6:00 pm news talking about why people owed this year versus getting a refund last year. This article talks about the new withholding tables for 2018. It first says that employees don't need to submit a new W-4 (Employee's Withholding Allowance Certificate), just that employers need to adjust withholding. But an update says that the IRS did come up with a new version of the W-4 to reflect changes in the tax law. And says " HR should alert employees to check their tax withholding and to submit a new W-4 if they want to make changes",


Howee



Joined: 27 Nov 2009
Posts: 11650
Location: Oklahoma (in my heart), whilst on my way to Oregon!


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PostPosted: 03/16/19 3:56 pm    ::: Reply Reply with quote

tfan wrote:
Howee wrote:
tfan wrote:
Howee wrote:


tfan wrote:
That is, he was claiming that less money was withheld this year than in previous years, all things being the same.

Understandable. But....in my case I changed no income nor withholding data, and still got zapped. Shocked


That is what was being claimed by the tax guy - people who didn't change income or withholding data - had their withholding amounts go down due to something that was in the tax law.


And what 'tax guy' are you referring to? And why/how could that happen without my consent? Shocked


Some tax accountant I saw on the 6:00 pm news talking about why people owed this year versus getting a refund last year. This article talks about the new withholding tables for 2018. It first says that employees don't need to submit a new W-4 (Employee's Withholding Allowance Certificate), just that employers need to adjust withholding. But an update says that the IRS did come up with a new version of the W-4 to reflect changes in the tax law. And says " HR should alert employees to check their tax withholding and to submit a new W-4 if they want to make changes",


Okay....so the new tax legislation DID make a difference. Right? (I find this all very confusing)



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GlennMacGrady



Joined: 03 Jan 2005
Posts: 5253
Location: Heisenberg


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PostPosted: 03/16/19 7:24 pm    ::: Reply Reply with quote

tfan wrote:
the new withholding tables for 2018.


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.
PUmatty



Joined: 10 Nov 2004
Posts: 14573
Location: Chicago


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PostPosted: 03/16/19 7:43 pm    ::: Reply Reply with quote

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.


Ex-Ref



Joined: 04 Oct 2009
Posts: 5254



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PostPosted: 03/19/19 5:06 pm    ::: Reply Reply with quote

I got back 58% of what I got last year.

I didn't make any changes to anything.

Crying or Very sad



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