Poll

Did the GOP tax plan help or hurt you?

Helped a lot.
Helped a little.
Didn't help or hurt.
Hurt a little.
Hurt a lot.

Author Topic: Did the GOP tax plan help or hurt you?  (Read 3583 times)

Omy

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Did the GOP tax plan help or hurt you?
« on: February 07, 2019, 03:24:25 PM »
It's a bit early to tell since we haven't completed our taxes yet, but preliminary research indicates that our deductions will go from $40k in 2017 to $24k in 2018 (so approx $16k more of income to be taxed.) I think I will benefit from the pass through income changes, but still fuzzy on all of that. Hoping the two things cancel eachother out. What is everybody else experiencing?

Tass

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Re: Did the GOP tax plan help or hurt you?
« Reply #1 on: February 07, 2019, 03:55:57 PM »
I make about $33k take-home. I'll pay about $800 less in taxes this year, though if you account for a slight pay increase my savings are closer to $1000.

I'd pay that amount in a heartbeat for different leadership of this country.

v8rx7guy

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Re: Did the GOP tax plan help or hurt you?
« Reply #2 on: February 07, 2019, 04:47:01 PM »
I felt that the most fair method to answer this was to plug my numbers for this year into the old 2017 form and compare to my return for this year.  It looks like the GOP tax plan saved me $1,496 .  When figuring this year's numbers in the 2017 form, I projected that the exemption would probably have increased from $4,050 to $4,100 as it seems that a $50 increase was typical for most years.

The big difference for me was the Child Tax Credit going from $2,000 to $4,000 .

Omy

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Re: Did the GOP tax plan help or hurt you?
« Reply #3 on: February 07, 2019, 05:15:27 PM »
That seems like a good way to do it. Unfortunately we don't get any kiddo credits.

seattlecyclone

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Re: Did the GOP tax plan help or hurt you?
« Reply #4 on: February 07, 2019, 05:29:49 PM »
Helped a ton in 2018. Our income was previously too high for the child tax credit, and now it isn't. That's $4,000 right there. The phaseout for AMT went up quite a bit, which seems to help accelerate the repayment of some AMT we paid years ago for incentive stock options. The general reduction in tax rates also helped a bit. On the other hand, losing the personal exemptions costs us a bit, especially since we still have enough itemized deductions for the larger standard deduction to be irrelevant. We're also just over the $10k limit for deducting state/local taxes, so that will cost us a small amount as well.

The net of all this is a bunch of extra money in our pocket as a relatively high-earning family. After we FIRE I don't expect the changes to be very material either way.

brandon1827

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Re: Did the GOP tax plan help or hurt you?
« Reply #5 on: February 08, 2019, 07:38:15 AM »
I made slightly more ($4,000) this year in wages/income, but the elimination of the personal exemption took my exemptions from $12,150 to $0. All told the tax law changes caused my taxable income to increase by $20,000, so despite dropping from the 25% to the 22% tax bracket, I came out much worse off this year versus last. I've kept my withholding fairly high as a forced savings to pay my annual property tax bill each spring after I file my taxes...my refund was $3,000 less this year so I'll be paying that out of pocket instead.

I'm very interested to see how this plays out politically, when lots of the GOP base voters go file their taxes and realize they got screwed, despite getting a little more take home pay with each pay check. I'd wager a large majority of them still expected to get a refund this year, but many of them will end up having to pay in...and they're not gonna like it.

Edit: sorry...rushed through this post and incorrectly referred to standard deduction when i meant personal exemptions.
« Last Edit: February 08, 2019, 12:11:34 PM by brandon1827 »

v8rx7guy

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Re: Did the GOP tax plan help or hurt you?
« Reply #6 on: February 08, 2019, 08:37:04 AM »
I made slightly more ($4,000) this year in wages/income, but the elimination of the $12,000 standard deduction took my exemptions to $0. All told the tax law changes caused my taxable income to increase by $20,000, so despite dropping from the 25% to the 22% tax bracket, I came out much worse off this year versus last. I've kept my withholding fairly high as a forced savings to pay my annual property tax bill each spring after I file my taxes...my refund was $3,000 less this year so I'll be paying that out of pocket instead.

I'm very interested to see how this plays out politically, when lots of the GOP base voters go file their taxes and realize they got screwed, despite getting a little more take home pay with each pay check. I'd wager a large majority of them still expected to get a refund this year, but many of them will end up having to pay in...and they're not gonna like it.

Elimination of the $12,000 standard deduction?

sol

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Re: Did the GOP tax plan help or hurt you?
« Reply #7 on: February 08, 2019, 09:08:12 AM »
Our taxes look remarkably similar to what I predicted over a year ago when the laws was first proposed.  We no longer have enough deductions to itemize, so will have to take the new larger standard deduction.  Tax rates went down but the brackets expanded to cover more income, so our gross total tax liability went up a little.  Fortunately the increased child tax credit more than makes up for the difference (in this first year) so our net taxes went down a little.  About $1400 down.

All of this is as predicted.  If the rest of the law shakes out as expected, the scheduled changes to tax brackets over the next five years will take away most of that next year, all of it the year after that, and then start costing us more, relative to our liability under the old tax structure.  Then some of our kids will start aging out of the child tax credit, which will cost us an additional $2,000 per kid (instead of the $1,000 it would have cost us under the old system).

Fortunately, I'm retired.  FIRE folks who are spending down savings or Roth IRA contributions pay no income taxes, and folks spending down their taxable investment accounts only pay capital gains, which are generally better than income taxes.

The impending loss of our (newly enlarged) child tax credits does mean that our withdrawal order in retirement is suddenly a little different, which is a somewhat convoluted and non-obvious impact of the new tax law.  We only have a few years of maximum kid credits coming our way before they age out at 17, so it makes sense for us to voluntarily incur additional income tax now, in order to utilize all of the offsetting child tax credit, while saving our tax-free options for after our kids age out and we no longer have the option to offset our tax liability.

Everyone's situation is different, of course, so don't take this advice as gospel.  But in my family's situation, the TCJA lowered our 2018 taxes a bit because we earned boatloads of money.  Next year, with lower income, we're expecting to pay far less in taxes than we paid this last year, but more than we would have paid without the new tax law going into effect. 

So temporarily the TCJA was good to us, as expected.

SwitchActiveDWG

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Re: Did the GOP tax plan help or hurt you?
« Reply #8 on: February 08, 2019, 10:09:09 AM »
Helped.. the tax brackets and extended child tax credit did the trick this year.

DadJokes

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Re: Did the GOP tax plan help or hurt you?
« Reply #9 on: February 08, 2019, 10:10:18 AM »
Plugging in my numbers under both systems (and updating the old system for inflation):

Old LawNew Law
AGI61,25761,257
Deduction12,80024,000
Exemptions12,3000
MAGI36,15737,257
Tax4,4714,090
Child Tax Credit1,0002,000
Tax Owed3,4712,090
Effective Tax Rate4.17%2.51%

Nothing changed prior to AGI. I can still make the same adjustments. I think taxpayers can claim less for teacher expenses under the new law, but we never spent close to the limit on those anyway.

Dropping my marginal bracket from 15% to 12% dropped my taxes by nearly $400, but doubling the child tax credit gave me the biggest benefit.
« Last Edit: February 08, 2019, 10:12:58 AM by DadJokes »

Laserjet3051

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Re: Did the GOP tax plan help or hurt you?
« Reply #10 on: February 08, 2019, 10:13:51 AM »
Helped.

Though we havent filed our 1040 yet, the #s we have plugged in to Turbo Tax and simultaneously provided our CPA,  show significant savings for 2018:

1. Throughout the year, my payroll taxes were lower than 2017 for essentially the same gross salary (I pay myself as an S-corp owner/employee). That was real extra money in my pocket every payroll.

2. Both my wife and I are business owners and expect to qualify for the 20% QBI deduction. While details of the new IRS guidance released a few weeks ago on QBI have yet to be truly understood by any accountant, the 20% QBI deduction comes out to be a massive savings. Even at the end of the day with the re-jigerring of the standard deduction and child credits/exemptions. We should be way ahead of our 2017 tax liability. We are average middle class folk (12% tack bracket), far from 1%ers.
« Last Edit: February 08, 2019, 10:15:43 AM by Laserjet3051 »

JGS1980

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Re: Did the GOP tax plan help or hurt you?
« Reply #11 on: February 08, 2019, 10:31:42 AM »
We are in the 24% Tax Bracket. We made about 30K more in 2018 than in 2017. Despite this, with the TCJA, I expect to pay about $5-6K less in taxes. This is primarily because I have 3 wonderful 2K tax credits (i.e. children) at home.

Coincidentally, the lower tax brackets and the child tax credits will coincide with the remainder of my prime working years until 2025. I'll take it.

I don't expect to be paying much in federal taxes once retired.

JGS

phildonnia

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Re: Did the GOP tax plan help or hurt you?
« Reply #12 on: February 08, 2019, 10:42:52 AM »
Helped a fair bit:
+ Standard deduction doubled
+ Child tax credit phaseout raised; credit doubled
+ 20% deduction for REIT dividends
- No more personal exemptions.

Total tax reduction, around $3k, although the final numbers aren't in yet.

However, we will actually be paying more this year due to other factors.  We sold some mutual funds in December which had over a decade of capital gains.  And we switched our 401(k)s from the Traditional to the Roth, which is like getting a $38k raise, tax-wise.


brandon1827

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Re: Did the GOP tax plan help or hurt you?
« Reply #13 on: February 08, 2019, 12:14:03 PM »
@v8rx7guy

Apologies...I was a bit distracted when I wrote that post and referred to standard deduction when I actually meant personal exemptions. The change in tax law reduced my exemptions from $12,150.00 last year to $0.00 this year.

v8rx7guy

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Re: Did the GOP tax plan help or hurt you?
« Reply #14 on: February 08, 2019, 12:29:33 PM »
@v8rx7guy

Apologies...I was a bit distracted when I wrote that post and referred to standard deduction when I actually meant personal exemptions. The change in tax law reduced my exemptions from $12,150.00 last year to $0.00 this year.

So you're married and have a dependent then?  Have you already completed your taxes for the year, because the standard deduction of $24,000 (MFJ) and the $2,000 CTC should well make up for the lack of a $12,150 exemption in most cases.

Philociraptor

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Re: Did the GOP tax plan help or hurt you?
« Reply #15 on: February 08, 2019, 01:21:36 PM »
2017: $142,970 gross, $96,367 AGI, $10,374 tax (10.77% of AGI, 7.26% of gross)
2018: $150,979 gross, $112,702 AGI, $11,379 tax  (10.1% of AGI, 6.87% of gross)

So overall, it looks like I saved in the last year. Long term effects of increasing wealth inequity remain to be seen, as those may affect long-term market returns and wages.

sol

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Re: Did the GOP tax plan help or hurt you?
« Reply #16 on: February 08, 2019, 01:39:10 PM »
So overall, it looks like I saved in the last year. Long term effects of increasing wealth inequity remain to be seen, as those may affect long-term market returns and wages.

More immediately, keep in mind that the TCJA rates are on a sliding scale for the next five years.  This year is the lowest taxes you will ever pay under the current law.

NorCal

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Re: Did the GOP tax plan help or hurt you?
« Reply #17 on: February 08, 2019, 01:47:21 PM »
So far, I'm roughly break even.  I'm in a higher tax bracket.

My base taxes are ~$3K higher than previously, but I'm no longer paying about ~$3K in AMT driven by SALT deductions.  I'm still waiting on my brokerage 1099's, so final details are pending.

The total difference will be a rounding error in the grand scheme of things.

Overall, I'm a fan of the new system.  Going from itemized deductions with the AMT to the standard deduction makes taxes MUCH simpler.  It also makes it easier to do rough math on the tax impact of investing / career decisions.

dandarc

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Re: Did the GOP tax plan help or hurt you?
« Reply #18 on: February 08, 2019, 01:48:02 PM »
Helped. Married, no kids, never itemized, although we were getting somewhat close with our charitable giving right before the law changed where alternating January/December would have saved taxes on the 2 year cycle.

Not taking the time to do returns under both sets of rules, however I'm sure the new law helped because:

The higher standard deduction works in our favor - lose $8100 in exemptions, but gain $12K in additional standard deduction. Then the QBI is an additional ~$13K deduction in our situation. Then the tax rates are lower than they were. I can't think of any individual change that went against us in the deal.

If we hadn't moved mid-year to California from Florida, the story would end there for us. Possible that local/state tax deduction would have pushed us over the top, but it doesn't look like it will be so bad as to offset the additional standard deduction and the QBI deduction for us.

dandarc

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Re: Did the GOP tax plan help or hurt you?
« Reply #19 on: February 08, 2019, 01:53:09 PM »
More immediately, keep in mind that the TCJA rates are on a sliding scale for the next five years.  This year is the lowest taxes you will ever pay under the current law.
Could you elaborate on this? I haven't seen that anywhere.

ixtap

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Re: Did the GOP tax plan help or hurt you?
« Reply #20 on: February 08, 2019, 01:59:39 PM »
It hurt me. My country is once again operating at a deficit.

brandon1827

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Re: Did the GOP tax plan help or hurt you?
« Reply #21 on: February 08, 2019, 02:05:04 PM »
@v8rx7guy

Apologies...I was a bit distracted when I wrote that post and referred to standard deduction when I actually meant personal exemptions. The change in tax law reduced my exemptions from $12,150.00 last year to $0.00 this year.

So you're married and have a dependent then?  Have you already completed your taxes for the year, because the standard deduction of $24,000 (MFJ) and the $2,000 CTC should well make up for the lack of a $12,150 exemption in most cases.

Yes...married with one child. While the standard deduction did help, the other changes (no student loan interest deduction, lower withholding, etc.) in addition to the personal exemption change, resulted in total deductions of roughly $4,000 less than on last year's return.

sol

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Re: Did the GOP tax plan help or hurt you?
« Reply #22 on: February 08, 2019, 02:08:52 PM »
Could you elaborate on this? I haven't seen that anywhere.

In order to minimize the damage to the national deficit as reported by OMB, which uses a ten year time horizon, the TCJA was written such that the tax cuts would be indexed to a higher inflation rate than before, and then totally expire in 2025.  The corporate tax cut was permanent, but the individual tax cuts are temporary.

This allowed republicans to say that their bill was giving most people a tax cut (without mentioning that it was temporary) while simultaneously saying it wasn't that bad for the budget (because tax rate would quietly go up in the future).  Some people have suggested that a future congress will object to letting the TCJA provisions kick in, and would instead vote to make the individual tax cut permanent.  That just does even more damage to the budget, though.

DadJokes

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Re: Did the GOP tax plan help or hurt you?
« Reply #23 on: February 08, 2019, 02:37:14 PM »
Could you elaborate on this? I haven't seen that anywhere.

In order to minimize the damage to the national deficit as reported by OMB, which uses a ten year time horizon, the TCJA was written such that the tax cuts would be indexed to a higher inflation rate than before, and then totally expire in 2025.  The corporate tax cut was permanent, but the individual tax cuts are temporary.

This allowed republicans to say that their bill was giving most people a tax cut (without mentioning that it was temporary) while simultaneously saying it wasn't that bad for the budget (because tax rate would quietly go up in the future).  Some people have suggested that a future congress will object to letting the TCJA provisions kick in, and would instead vote to make the individual tax cut permanent.  That just does even more damage to the budget, though.

To answer it with more detail, the IRS will now use chained CPI to calculate inflation rather than the standard CPI that it has used in the past. Chained CPI typically has a lower inflation rate than the standard CPI.

That means that increases in items like the standard deduction, credit amounts, and contribution limits will increase more slowly under the new tax plan.

FireHiker

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Re: Did the GOP tax plan help or hurt you?
« Reply #24 on: February 08, 2019, 03:31:57 PM »
Hurt, badly, as expected. Living in a HCOL area with high property taxes; the new "higher" standard deduction was nowhere near what we used to be able to claim. Almost everyone I know was impacted negatively, even people who really surprised me that live elsewhere and make quite a bit less money. I have only heard a few anecdotes from people I personally know who were not negatively impacted.

walkwalkwalk

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Re: Did the GOP tax plan help or hurt you?
« Reply #25 on: February 08, 2019, 07:16:17 PM »
Hurt, badly, as expected. Living in a HCOL area with high property taxes; the new "higher" standard deduction was nowhere near what we used to be able to claim. Almost everyone I know was impacted negatively, even people who really surprised me that live elsewhere and make quite a bit less money. I have only heard a few anecdotes from people I personally know who were not negatively impacted.
That's what it was trying to accomplish, to get so many people to move from HCOL places like NY and CA, so that eventually they would have to lower their property & income tax rates. Whether that's good or bad is up to you.

ixtap

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Re: Did the GOP tax plan help or hurt you?
« Reply #26 on: February 08, 2019, 10:01:36 PM »
Hurt, badly, as expected. Living in a HCOL area with high property taxes; the new "higher" standard deduction was nowhere near what we used to be able to claim. Almost everyone I know was impacted negatively, even people who really surprised me that live elsewhere and make quite a bit less money. I have only heard a few anecdotes from people I personally know who were not negatively impacted.

The only people I know personally who have commented were just complaining about their refund. They couldn't tell you the actual taxes paid.

jim555

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Re: Did the GOP tax plan help or hurt you?
« Reply #27 on: February 09, 2019, 06:36:01 AM »
Made no difference to me.  Owe no Federal tax due to qualified dividends and low income.

Severian

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Re: Did the GOP tax plan help or hurt you?
« Reply #28 on: February 09, 2019, 06:31:09 PM »
In 2018 it helped me to the tune of about 2k. Had it happened a couple of years ago it would have hurt me for more than that because I had a very different situation. 2019 I probably break about even, because my salary is higher now than last year and my state income taxes are significant. If things go as well as I hope this year I'll be hurt by that, perhaps significantly, but it will be a nice problem to have (I'll still think about re-domiciling to a state without an income tax if that happens though.)

I'm not sure looking at this year's return tells the whole story though, as I think this is likely to be more a tax deferment than a tax cut, in the end. I think it will likely wind up being a transfer payment from a cohort with peak earnings in a range of years to another with peak earnings in a different range. Hard to tell what those ranges will be though, so I'm not sure if it will help or hurt me in the long run.

I do think a couple of things about it make quite a bit of sense though. If it were up to me I would entirely eliminate the mortgage interest deduction. And, even though it's the deduction I am most likely to benefit from, state income taxes should not be deductible. This goes to the heart of the 10th amendment.

nereo

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Re: Did the GOP tax plan help or hurt you?
« Reply #29 on: February 10, 2019, 08:24:18 AM »
It had no direct influence on our 2018 taxes; a combination of only 7 months income and aggressive saving (saver's credit) yielded no federal tax burden - would have been the same under the previous tax law. 
It will likely look much different for us in 2019.


Time will tell what the indirect effects will be, but the loss of federal revenue will likely have very negative impacts on our careers in the years to come.

Drakmon

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Re: Did the GOP tax plan help or hurt you?
« Reply #30 on: February 10, 2019, 10:38:15 AM »
We earn over $250k year in a higher tax state (NY) - we actually ended up owing about 2% less in 2018 than in 2017. Yay! Also, taxes were much easier since it wasn't worth it to itemize and we just took the standard deduction. Also yay!

The $10k state tax limit impacted us a little bit on federal, but we were only slightly over that limit this year.

That being said, we owned a ridiculous amount of taxes this year at tax time (>$10k) due to incorrect withholding (new job early in the year) and pretty significant self-employment income. We just corrected it and will look at adding in some additional withholding just so we don't have a ridiculous bill at the start of the year (last year was ~$8k).

2018TaxMan

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Re: Did the GOP tax plan help or hurt you?
« Reply #31 on: February 10, 2019, 05:56:27 PM »
Posting from a throw-away account ...

Despite having a high income, our taxes are pretty simple.  Married, spouse doesn't work, no kids, no real-estate.  Just my W-2, a couple 401k/IRAs, and a taxable brokerage account.  In 2017 it was standard-deduction (no itemizing) and typical exemptions; in 2018 it's the new larger standard deduction.
The only semi-tricky things are finding the basis for my employee stock program, and convincing the tax-software to do the right accounting for our backdoor Roths, neither of which are any different this year.

I'm sad to say that the tax give-away worked out fairly well for us.
Despite having ~$48k extra income this year, we pay essentially the same tax.

Code: [Select]
                    2017          2018
Taxable Income      $307,418      $355,612
Tax                 $ 75,317      $ 75,116

If I had earned that extra $48k in 2017, it would have been in the 33% bracket (for MFJ), which would have cost nearly $16k.

So I guess I saved $16k.  Not that I voted for it.

(ETA:  Alternatively, a taxable income of $355,612 in 2017 would equate to $92,569 in tax, which is $17,450 more than I'm actually paying in 2018.  So I guess I really saved $17.5k.)
« Last Edit: February 10, 2019, 06:10:20 PM by 2018TaxMan »

seattlecyclone

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Re: Did the GOP tax plan help or hurt you?
« Reply #32 on: February 10, 2019, 09:05:07 PM »
Helped a ton in 2018. Our income was previously too high for the child tax credit, and now it isn't. That's $4,000 right there. The phaseout for AMT went up quite a bit, which seems to help accelerate the repayment of some AMT we paid years ago for incentive stock options. The general reduction in tax rates also helped a bit. On the other hand, losing the personal exemptions costs us a bit, especially since we still have enough itemized deductions for the larger standard deduction to be irrelevant. We're also just over the $10k limit for deducting state/local taxes, so that will cost us a small amount as well.

Revisiting this now that I'm basically done with our taxes (still waiting on one 1099 before I file, but what I gleaned from transaction history should be close). I punched our numbers from this year into the tax forms from last year to make a comparison.

For us, the net effect of the lower tax rates, eliminating the exemptions for each family member, and limiting the deductibility of state/local taxes was basically a wash: our tax before credits changed by less than $100 between the old formulas and the new.

Raising the income cutoff for the child tax credit (and increasing the child tax credit from $1,000 to $2,000 per kid) gave us an extra $4,000, as I guessed before.

Raising the exemption and phaseouts for the AMT gave us a ~$4,000 bigger tax credit from Form 8801 than we would have had under the 2017 rules. This is a tax credit for repayment of AMT due to incentive stock options I exercised with my previous employer. Hard to say exactly how much to value this, as getting more this year means there will be that much less to carry forward to a future year, but in FIRE we don't necessarily expect to have much (if any) tax to offset with this credit so we might never reclaim the full amount anyway.

Sugaree

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Re: Did the GOP tax plan help or hurt you?
« Reply #33 on: February 11, 2019, 06:39:53 AM »
If I fill out the 2017 forms with 2018 data then I'd have ended up owing $1400 more in tax with $1000 less in credits.  Plus we had $300 less withheld this year, so I'd say that the tax reform saved me somewhere in the $2700 range. 

Much Fishing to Do

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Re: Did the GOP tax plan help or hurt you?
« Reply #34 on: February 11, 2019, 07:00:47 AM »
Had windfall year (unusually large business profit) and I think I'll pay quite a but less than would have under the old plan according to some estimating, so the changes kicked in just in time for my big year, but I will not know anything for a few more weeks I'm sure.  Will never make close to that much again so its really just this year that makes the big difference for me.

Arbitrage

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Re: Did the GOP tax plan help or hurt you?
« Reply #35 on: February 11, 2019, 08:35:21 AM »
Could you elaborate on this? I haven't seen that anywhere.

In order to minimize the damage to the national deficit as reported by OMB, which uses a ten year time horizon, the TCJA was written such that the tax cuts would be indexed to a higher inflation rate than before, and then totally expire in 2025.  The corporate tax cut was permanent, but the individual tax cuts are temporary.

This allowed republicans to say that their bill was giving most people a tax cut (without mentioning that it was temporary) while simultaneously saying it wasn't that bad for the budget (because tax rate would quietly go up in the future).  Some people have suggested that a future congress will object to letting the TCJA provisions kick in, and would instead vote to make the individual tax cut permanent.  That just does even more damage to the budget, though.

Correct, except that it's a lower inflation rate, not a higher one.  The brackets (and some other things) move up more slowly than before. 

FireHiker

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Re: Did the GOP tax plan help or hurt you?
« Reply #36 on: February 11, 2019, 05:39:09 PM »
Hurt, badly, as expected. Living in a HCOL area with high property taxes; the new "higher" standard deduction was nowhere near what we used to be able to claim. Almost everyone I know was impacted negatively, even people who really surprised me that live elsewhere and make quite a bit less money. I have only heard a few anecdotes from people I personally know who were not negatively impacted.
That's what it was trying to accomplish, to get so many people to move from HCOL places like NY and CA, so that eventually they would have to lower their property & income tax rates. Whether that's good or bad is up to you.

Oh certainly, I expected it to hurt me because of our outrageously high property taxes so I was annoyed but not surprised. The thing that surprised me was how many people I personally know in LCOL areas who were so much worse off: A single mom (medium COL area) who adjusted her withholdings to take out an extra $400 per paycheck in order to still break even (fortunately she had the forethought to do so); a married couple in the midwest, solid middle class, definitely not high earners, with a differential of $6100 additional owed in tax compared to the previous year; a single mom in a LCOL area with $3300 additional tax owed compared to the previous year. All three of these specific friends of mine were stunned. @ixtap the people I mention here were referencing the difference in total tax burden compared to the previous year, not refund. I, too, have seen people complaining about not getting a refund because they didn't adjust withholdings. We always try to be dialed in to break even or owe slightly but it looks like we still need to adjust our withholdings since the property tax change really hits us hard. Fortunately we have enough of a state refund (strangely) to make up for 2/3 of the federal tax we owe this year. I don't know how my midwest friend will manage.

We do ultimately plan to relocate to a LCOL area once our kids are grown (or downsize considerably if we stay in a medium to HCOL area). At that point we may benefit, but who knows what things will look like then.

BTDretire

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Re: Did the GOP tax plan help or hurt you?
« Reply #37 on: February 11, 2019, 08:07:56 PM »
 The media was reporting how refund amounts are down this year.
 (Bad news, Trump cheated you!)
I did hear one report that said taxes owed for most people are down and the
reason refunds are down is because withholding was less.
Taxes paid are down for about 90% of taxpayers.

Abe

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Re: Did the GOP tax plan help or hurt you?
« Reply #38 on: February 11, 2019, 08:17:01 PM »
Definitely paid less this year than last. We had a lot of job changes and our income increased so it's hard to compare apples to apples. However, the absolute federal tax rate was only $45k on over $250k in taxable income. That's about the same as last year with a substantial income increase. We're not plowing money into retirement accounts in anticipation of a giant down payment requirement in about 18 months, otherwise it'd be even lower!

MaybeBabyMustache

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Re: Did the GOP tax plan help or hurt you?
« Reply #39 on: February 11, 2019, 08:24:37 PM »
Hurt, badly, as expected. Living in a HCOL area with high property taxes; the new "higher" standard deduction was nowhere near what we used to be able to claim. Almost everyone I know was impacted negatively, even people who really surprised me that live elsewhere and make quite a bit less money. I have only heard a few anecdotes from people I personally know who were not negatively impacted.

This.

Civex

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Re: Did the GOP tax plan help or hurt you?
« Reply #40 on: February 11, 2019, 08:50:23 PM »
Helped quite a bit-surprisingly. Still don't support it.

We live in a higher tax state and was expecting that to wash out the loss of the marriage penalty and phase out/loss of child credit.

Part of this was due to qualifying for two state deductions that we previously didn't qualify for/take advantage of (529 contribution and a crazy student loan credit.)

Actual tax rate dropped from ~17% to 14%.

Arbitrage

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Re: Did the GOP tax plan help or hurt you?
« Reply #41 on: February 12, 2019, 07:53:02 AM »
Hurt, badly, as expected. Living in a HCOL area with high property taxes; the new "higher" standard deduction was nowhere near what we used to be able to claim. Almost everyone I know was impacted negatively, even people who really surprised me that live elsewhere and make quite a bit less money. I have only heard a few anecdotes from people I personally know who were not negatively impacted.

This.

Similar situation here, but I haven't computed the final numbers yet.  CA resident, itemizing before and after the tax changes, though now I'm only edging out the standard deduction by a couple grand with the SALT limit.  Love paying taxes on my taxes!

dcozad999

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Re: Did the GOP tax plan help or hurt you?
« Reply #42 on: February 12, 2019, 12:31:13 PM »
I haven't done the return yet but did a rough estimate using the tax tables and standard deduction.

Taxes are within a few hundred of last year, however with the child tax credits, I'll pay about $2k less than last year.

Even though it benefits me, I still don't agree with the tax cut.

Abe

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Re: Did the GOP tax plan help or hurt you?
« Reply #43 on: February 12, 2019, 09:07:37 PM »
I had done an analysis of the effect of tax deductions in a high cost of living state (California) and found that, in general, a couple with an income >$300k with a substantial mortgage ($30k or more) would have significant tax savings. With an income less than that it depended, but in general people would come out roughly the same or even worse, have more taxes. This tax plan was definitely not designed to help average income households.

v8rx7guy

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Re: Did the GOP tax plan help or hurt you?
« Reply #44 on: February 12, 2019, 09:17:26 PM »
I had done an analysis of the effect of tax deductions in a high cost of living state (California) and found that, in general, a couple with an income >$300k with a substantial mortgage ($30k or more) would have significant tax savings. With an income less than that it depended, but in general people would come out roughly the same or even worse, have more taxes. This tax plan was definitely not designed to help average income households.

I would like to know what your criteria for "average income households" is.  Are you talking California specific?  Average in the USA? Are you assuming no kids?  I feel like I need to call BS...

Poundwise

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Re: Did the GOP tax plan help or hurt you?
« Reply #45 on: February 12, 2019, 09:18:22 PM »
I did a first pass through the tax software and my 2018 taxes are an astounding $10,022 over my 2017 taxes and expected to go up after I enter my dividend income.  We live in one of the highest SALT areas in NYS. AGI hovers around $160K.

Some of this jump is to be expected, as I purposely front-loaded 2017 by prepaying as many SALT as I could, and also placed two years' worth of charitable deductions into a DAF that year... from now on I will be taking the standard deduction every other year or so.

A better comparison may be made to 2016 which was more typical.  Our total tax for 2018 is currently estimated at $4986 over the figure for that year. 

The increase in total tax seems to be softened by $6K in child tax credits.  At least I strongly hope so. The changes in withholding are also confusing, so we seem on target for less than a $1K refund this year, as opposed to $8K last year (with fiddling), and $5K in 2016 (we over-withhold because my income is uneven and I hate filing quarterly taxes).

I must admit, I was quite shocked when I printed out the 1040 form and half of it seemed to be missing... it feels like it should be done in crayon.

« Last Edit: February 12, 2019, 09:23:43 PM by Poundwise »

YttriumNitrate

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Re: Did the GOP tax plan help or hurt you?
« Reply #46 on: February 12, 2019, 09:54:12 PM »
Being in a relatively low property tax state with a sub 4% mortgage, it definitely helped me. We just barely squeezed over the itemizing threshold in 2017, and this year we didn't bother spending the time to enter the numbers for itemizing. Gross income for both years was about $120k, and our federal taxes for 2018 were about 75% less than in 2017 (10k vs 2,500). Only about half that is attributable to tax changes with the other half attributable to the birth of a second dependent (tried running the numbers without our little bundle of joy to see how much joy she was bringing).

Tass

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Re: Did the GOP tax plan help or hurt you?
« Reply #47 on: February 12, 2019, 10:36:17 PM »
I had done an analysis of the effect of tax deductions in a high cost of living state (California) and found that, in general, a couple with an income >$300k with a substantial mortgage ($30k or more) would have significant tax savings. With an income less than that it depended, but in general people would come out roughly the same or even worse, have more taxes. This tax plan was definitely not designed to help average income households.

I would like to know what your criteria for "average income households" is.  Are you talking California specific?  Average in the USA? Are you assuming no kids?  I feel like I need to call BS...

Are you suggesting $300k for a couple is an average income? $150k each? Because then I must call BS...

Abe

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Re: Did the GOP tax plan help or hurt you?
« Reply #48 on: February 13, 2019, 12:52:18 AM »
I had done an analysis of the effect of tax deductions in a high cost of living state (California) and found that, in general, a couple with an income >$300k with a substantial mortgage ($30k or more) would have significant tax savings. With an income less than that it depended, but in general people would come out roughly the same or even worse, have more taxes. This tax plan was definitely not designed to help average income households.

I would like to know what your criteria for "average income households" is.  Are you talking California specific?  Average in the USA? Are you assuming no kids?  I feel like I need to call BS...

I will take back the increase in taxes comment, in most cases there is not an increase in taxes for the average household in California ($70k income). I can't find my worksheet, but found a more legitimate source to cite instead (below). The increase in total income due to reduced taxes is 1% = $700 (essentially the same). Compared to the 95% income quintile ($300k) which on average has a 2.9% increase in total income = $8700. Regardless of the absolute difference (obviously a higher percent of a higher number is more), the main issue is the 1% vs 2.9% change. So my main point, that the tax reform was not designed for average income household, still stands. If it were, the relative increase in income would be the same for all income quintiles.

Table 3: https://taxfoundation.org/the-distributional-impact-of-the-tax-cuts-and-jobs-act-over-the-next-decade/
« Last Edit: February 13, 2019, 12:56:50 AM by Abe »

fattest_foot

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Re: Did the GOP tax plan help or hurt you?
« Reply #49 on: February 13, 2019, 08:23:34 AM »
MAGI went up by about $10k from last year, total tax liability went down $800.

Had our income stayed the same, our tax liability would've been about $1800 less than last year.