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 12635 times)

nereo

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Re: Did the GOP tax plan help or hurt you?
« Reply #100 on: March 03, 2019, 06:22:30 AM »
Read through all the responses.....of those who actually answered the OPs original question---it looks like about a 4:1 ratio in favor of those who will pay less taxes this year.

I will pay less----so I consider the tax plan a success. I'm not wrapped around the axle on which party voted it in. My money doesnt favor either party.

But it seems thats hard to admit for some.
Apparently you didn’t read the comments, and have made the pre-determination that lower = better.


Indexer

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Re: Did the GOP tax plan help or hurt you?
« Reply #101 on: March 03, 2019, 07:59:58 AM »
Helped a little.

For me, the new standard deduction is slightly lower than my itemized deductions plus the old personal exemption. As a result, the change was minimal but not in my favor.

However, the lower rates helped make up for it so I think it saved me $500.


Thoughts on the tax plan:  It wasn't a tax cut as much as a delay. If you cut taxes without cutting spending then you have to borrow more money, that will be paid back with taxes in the future. The GOP didn't cut taxes, they just moved them further into the future. Hopefully by then I'll be in a much lower bracket because I'll be FIRE.

RelaxedGal

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Re: Did the GOP tax plan help or hurt you?
« Reply #102 on: March 06, 2019, 07:51:04 PM »
Our effective tax rate dropped 4.6%   That rates a "Helped a lot", though some of that decrease is due to lower total income.


Retireatee1

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Re: Did the GOP tax plan help or hurt you?
« Reply #103 on: March 17, 2019, 04:32:18 PM »
Single, no kids, 24% marginal rate, standard deduction.

I ran a simulation with both the 2017 and 2018 tax rates and my effective tax rate (federal + state + FICA) dropped from 30.6% to 28.57%. 

However my refund was eliminated due to the estimated tax calculation used by my employer.

The big winners were parents and pass-through business owners.

JGS1980

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Re: Did the GOP tax plan help or hurt you?
« Reply #104 on: March 18, 2019, 01:28:48 PM »
The big winners were parents and pass-through business owners.

Parents, Pass-Through business owners (i.e Real Estate Tycoons), and CORPORATIONS who were given permanent AND got to keep all their old loop-holes too!


phildonnia

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Re: Did the GOP tax plan help or hurt you?
« Reply #105 on: March 18, 2019, 03:06:07 PM »
This question often turns into "Did you pay more or less", which assumes all other things being equal.  Or among the less-informed, we often hear "Was your refund bigger", which is rather irrelevant.

So, here's some graphs of my own situation, showing the picture on several different axes:
« Last Edit: March 18, 2019, 03:08:35 PM by phildonnia »

penguintroopers

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Re: Did the GOP tax plan help or hurt you?
« Reply #106 on: March 22, 2019, 10:02:54 AM »
How it hurt: We had our student tuition/fees deduction taken away (I think this would have been $3k or so in taxable income lessened, so ~$660?)

Neutral: we phased out of the savers credit by making more money

How it helped: standard deduction went from $12700 to $24k, we could keep the lifetime learners credit, and the AMT minimum went up significantly. I didn't even realize we were in danger of getting into AMT because our MAGI was ~65k in 2017, and jumped $108k in 2018 (finishing grad school and getting my new job). Had the AMT stayed the same as 2017 I think we would be paying significantly more, although how much more is difficult for me to calculate as we haven't had to worry about AMT before...

I'm going to go with either helped, or helped a lot because of the AMT difference. The weird thing I'm gathering from reading this form and my personal experience is that the people who overall had a positive outcome are those with a lot of kids, few reasons to itemize and thus benefiting from a higher standard deduction, or those with a higher than average income like ours where the AMT is much harder to hit. Targeting the middle-class didn't really seem like the goal, unless that middle-class has kiddos. (Correct me if I'm wrong, I strangely like learning about this stuff).

BlueHouse

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Re: Did the GOP tax plan help or hurt you?
« Reply #107 on: March 22, 2019, 11:12:08 AM »
I moved from the 33 to 35% marginal tax bracket.   [Edited to add]:  My income decreased from last year.

Some of my deductions aren't allowable.
« Last Edit: March 31, 2019, 08:01:37 AM by BlueHouse »

Travis

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Re: Did the GOP tax plan help or hurt you?
« Reply #108 on: March 24, 2019, 11:02:52 AM »
It wasn't an apples to apples comparison for us as our taxable income dropped by quite a bit this year due to my wife qualifying for her company's 401K.  We took a $3000 loss and then add in whatever the new law saved us.  Our effective tax rate dropped from 7 to 4%.

Tuskalusa

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Re: Did the GOP tax plan help or hurt you?
« Reply #109 on: March 24, 2019, 11:21:07 AM »
Hurt. We live in a HCOL coastal state. The SALT cap really limited our deductions, which hurt. Will need to re-formulate strategy for 2019.

GreenToTheCore

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Re: Did the GOP tax plan help or hurt you?
« Reply #110 on: March 25, 2019, 11:10:32 PM »
Monetarily:
The end tax total was 2k less.

Philosophically:
- I don't appreciate how the higher standard disincentivized actions that would've previously helped with itemizing, possibly impacting some folks' motivation to donate to charity.
- I don't think more money back to the people will result in getting them into a better financial state. I think the common action will be to blow their "refund"  and continue getting into debt, as evidenced by what I'm hearing: "what are you buying with your refund?", "I can't wait to treat myself once my refund comes back", etc.  How many more things do people need???
- I wish the gov would make a g*d damned budget as if it were a family business trying to get afloat: functional, profitable, long-term view.

Blech.

DadJokes

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Re: Did the GOP tax plan help or hurt you?
« Reply #111 on: March 26, 2019, 05:57:39 AM »
- I don't appreciate how the higher standard disincentivized actions that would've previously helped with itemizing, possibly impacting some folks' motivation to donate to charity.

I am very curious to see how charitable giving is impacted by the new tax law. In my tiny circle of my household and my in-laws (whose taxes I did), it did not make an impact, but it makes sense that there will be a lot less charitable giving by those who were on the fringe with the standard deduction.

FIRE@50

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Re: Did the GOP tax plan help or hurt you?
« Reply #112 on: March 26, 2019, 06:57:56 AM »
When people have effective tax rates in the single digits, it is hard to believe that the tax write off really affects charitable giving.

Besides, wealthy people just use this to setup phony foundations to avoid taxes and funnel money to their cousins and buddies.

Zamboni

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Re: Did the GOP tax plan help or hurt you?
« Reply #113 on: March 26, 2019, 07:10:00 AM »
Anyone who is helped this year . . . please bear in mind that the little thing that helped you is probably being phased out over the next five years.

ixtap

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Re: Did the GOP tax plan help or hurt you?
« Reply #114 on: March 26, 2019, 09:49:47 AM »

- I don't think more money back to the people will result in getting them into a better financial state. I think the common action will be to blow their "refund"  and continue getting into debt, as evidenced by what I'm hearing: "what are you buying with your refund?", "I can't wait to treat myself once my refund comes back", etc.  How many more things do people need???


To be fair, that is good for the economy right up until the credit bubble bursts.

DeniseNJ

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Re: Did the GOP tax plan help or hurt you?
« Reply #115 on: March 26, 2019, 11:01:23 AM »
Hurt. We live in a HCOL coastal state. The SALT cap really limited our deductions, which hurt. Will need to re-formulate strategy for 2019.

This!

Laserjet3051

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Re: Did the GOP tax plan help or hurt you?
« Reply #116 on: March 26, 2019, 11:47:47 AM »
Anyone who is helped this year . . . please bear in mind that the little thing that helped you is probably being phased out over the next five years.

Your bias is showing. Our substantial 20% QBI deduction as small business owners (wife and I) amounts to a whole LOT of savings. And even if it is phased out in 2026 (that is, if congress doesn't extend it), we will adjust our strategy accordingly.

Little? Hardly.

sol

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Re: Did the GOP tax plan help or hurt you?
« Reply #117 on: March 26, 2019, 11:52:17 AM »
Your bias is showing.

It's not bias to remind people that the individual tax law changes are all scheduled to phase out over the next few years.  That's an honest statement of fact, free of bias or spin.

Laserjet3051

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Re: Did the GOP tax plan help or hurt you?
« Reply #118 on: March 26, 2019, 12:50:07 PM »
Your bias is showing.

It's not bias to remind people that the individual tax law changes are all scheduled to phase out over the next few years.  That's an honest statement of fact, free of bias or spin.

I agree with you sol. However, my comment was in response to the term "little thing" that I bolded above.  There has been much effort from the left belittling the value of tax cuts to to the ordinary/common American. While I acknowledge that for some folks, their taxes may have increased, or stayed flat, the assumption that, collectively, it was only a "little thing" that helped the average American, suggests that there arent many Americans whom have had "large things" that have helped them taxwise. As you are well aware, the tax narrative being promulgated by certain groups, may in fact not be true for many average, middle class Americans.

nereo

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Re: Did the GOP tax plan help or hurt you?
« Reply #119 on: March 26, 2019, 01:19:44 PM »
There is temporal and there is spatial.
In other words, a large change in 2019 that lasts only a couple of years ≠ a smaller change that is permanent.

ysette9

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Re: Did the GOP tax plan help or hurt you?
« Reply #120 on: March 26, 2019, 10:57:44 PM »
There is temporal and there is spatial.
In other words, a large change in 2019 that lasts only a couple of years ≠ a smaller change that is permanent.
“The average household would get a tax cut of $1,610 in 2018, a bump of about 2.2 percent in that average household's income, according to a report released Monday by the Tax Policy Center, a nonpartisan think tank that has been critical of the tax overhaul plan.”

https://www.npr.org/2017/12/19/571754894/charts-see-how-much-of-gop-tax-cuts-will-go-to-the-middle-class

So we can now debate whether an average of 2.2% for the average household is “little” or not.



ysette9

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Re: Did the GOP tax plan help or hurt you?
« Reply #121 on: March 26, 2019, 10:59:23 PM »


I can see one’s impression of whether the tax cut was “little” or not may depend a good deal on one’s household income.

sol

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Re: Did the GOP tax plan help or hurt you?
« Reply #122 on: March 27, 2019, 12:05:34 AM »
So we can now debate whether an average of 2.2% for the average household is “little” or not.

More importantly, IMO, is how you define "average".  As ysette9's graph (and many others like it) shows, the change for the "average" household is very different from the change for the median household, because so much of the benefit goes primarily to the very upper income brackets.

In theory, the law could still report an "average" increase of 2.2% while taking money away from 90% of households, if it gave enough money to the top 10% of households, if they're defining average as total tax breaks divided by total households.  You have to question the motives of people who construct your statistics.

nereo

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Re: Did the GOP tax plan help or hurt you?
« Reply #123 on: March 27, 2019, 04:35:49 AM »
I suspect a great deal of people judge the effects of any tax plan largely on the size of their refund.  That's the number people see and remember, and it is then easy (and erroneous) to say "my tax refund is greater/smaller than last year - this plan helped/hurt my family".  However this metric does not take into account how much this person actually paid in taxes.

Such a viewpoint also assumes that circumstances were identical - including salary, market gains, deductions and credits.   If you are comparing previous years' taxable burden to this current year and any of these circumstances in your life have changed, you are not making an apples-to-apples comparison.

Vertical Mode

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Re: Did the GOP tax plan help or hurt you?
« Reply #124 on: March 27, 2019, 06:53:26 AM »
Finally filed for 2018. I think overall it helped a little, but last year was an anomaly for me in many ways so it's hard to compare apples to apples.

Spent almost half of 2018 without a job (most of which was on purpose), so the lower earnings meant the increase to a $12k standard deduction took a huge chunk off what I might have owed. Paid some of that savings back via the Shared Responsibility Payment since I elected to not carry insurance for ~2 months (this was a LOT less than I thought it would be - this penalty turns out to not have the sting that I was worried it would).

Suspect that I would have seen a much larger refund, except that I also sold some stock lots to come up with cash, GF and I bought a house last year. Capital gains to declare and be taxed on.

Was really unsure how the changes would play out for my situation, but in the end I got a Federal refund and owed the State money as usual (MA living up to its reputation!).

ixtap

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Re: Did the GOP tax plan help or hurt you?
« Reply #125 on: March 27, 2019, 09:07:34 AM »
Finally filed for 2018. I think overall it helped a little, but last year was an anomaly for me in many ways so it's hard to compare apples to apples.

Spent almost half of 2018 without a job (most of which was on purpose), so the lower earnings meant the increase to a $12k standard deduction took a huge chunk off what I might have owed. Paid some of that savings back via the Shared Responsibility Payment since I elected to not carry insurance for ~2 months (this was a LOT less than I thought it would be - this penalty turns out to not have the sting that I was worried it would).

Suspect that I would have seen a much larger refund, except that I also sold some stock lots to come up with cash, GF and I bought a house last year. Capital gains to declare and be taxed on.

Was really unsure how the changes would play out for my situation, but in the end I got a Federal refund and owed the State money as usual (MA living up to its reputation!).

I feel like this "standard deduction" increase was one of the biggest scams in selling the plan. There isn't that big of a difference between the old standard deduction + personal exemption and the new standard deduction without a personal exemption.

tralfamadorian

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Re: Did the GOP tax plan help or hurt you?
« Reply #126 on: March 29, 2019, 01:13:03 PM »
We just finished our 2018 taxes. Roughly equivalent gross income from 2017 to 2018, tax liability fell by ~37%. I expected a drop because many of the tax breaks taken away or reduced didn't affect me and many of the new breaks did but not that much.

Vertical Mode

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Re: Did the GOP tax plan help or hurt you?
« Reply #127 on: March 30, 2019, 11:11:42 AM »
Finally filed for 2018. I think overall it helped a little, but last year was an anomaly for me in many ways so it's hard to compare apples to apples.

Spent almost half of 2018 without a job (most of which was on purpose), so the lower earnings meant the increase to a $12k standard deduction took a huge chunk off what I might have owed. Paid some of that savings back via the Shared Responsibility Payment since I elected to not carry insurance for ~2 months (this was a LOT less than I thought it would be - this penalty turns out to not have the sting that I was worried it would).

Suspect that I would have seen a much larger refund, except that I also sold some stock lots to come up with cash, GF and I bought a house last year. Capital gains to declare and be taxed on.

Was really unsure how the changes would play out for my situation, but in the end I got a Federal refund and owed the State money as usual (MA living up to its reputation!).

I feel like this "standard deduction" increase was one of the biggest scams in selling the plan. There isn't that big of a difference between the old standard deduction + personal exemption and the new standard deduction without a personal exemption.

Personal Exemption was $4400 IIRC? Standard deduction doubling to $12k means an additional $1600 deduction, which given the reduced income I had last year, represented a larger-than-usual percentage of income for the year. I suppose I could have clarified and said "huge marginal chunk" ;-).

I agree that the marketing of this scheme made this sound like a much bigger tax break than it actually was for many people. It definitely helped a bit on aggregate, though.

Heroes821

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Re: Did the GOP tax plan help or hurt you?
« Reply #128 on: March 30, 2019, 12:05:04 PM »
2017 was a little different for us as I had an S-corp and an odd situation, but this year taxes appear to be significantly lower than they would of been on the old tax plan.


Joint Income, 3 kids: Gross ~135,000-$140,000 w/dividends.

SS Taxes: $7592.09 (5.62%)
Medicare: $1775.58 (1.32%)
Federal Due: $2338 (1.73%)
SC State Tax Due: $3727 (2.76%)

Total: $15,432.67 or 11.43%

I'd we are probably in a sweet spot regarding the new tax plan with our income level and having 3 kids.   I did not run the numbers through 2017 calculators, but I doubt it was this low. State would of been higher anyway since we got to deduct $10,000 worth of tuition off from the kids elementary school with the 529 change.

accolay

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Re: Did the GOP tax plan help or hurt you?
« Reply #129 on: March 30, 2019, 04:39:46 PM »

- I don't think more money back to the people will result in getting them into a better financial state. I think the common action will be to blow their "refund"  and continue getting into debt, as evidenced by what I'm hearing: "what are you buying with your refund?", "I can't wait to treat myself once my refund comes back", etc.  How many more things do people need???


To be fair, that is good for the economy right up until the credit bubble bursts.

Yeah. Considering the average household credit card debt is around $5k, most people might choose to pay off their debt with the refund if they get it, but I'm assuming it's more likely they'll just blow it all on more crap with the refund because they're ok with it.

YttriumNitrate

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Re: Did the GOP tax plan help or hurt you?
« Reply #130 on: March 30, 2019, 09:14:35 PM »
SS Taxes: $7592.09 (5.62%)
Medicare: $1775.58 (1.32%)
Federal Due: $2338 (1.73%)
SC State Tax Due: $3727 (2.76%)
I'm in a pretty close situation, and the "federal" taxes are getting to the level of a rounding error when compared to the total amount of taxes paid. This is even more true when property taxes are added to the calculations.

ForeverPoor

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Re: Did the GOP tax plan help or hurt you?
« Reply #131 on: March 30, 2019, 10:16:55 PM »
Hurt me quite a bit - I really needed the itemized deductions to minimize impact.

penguintroopers

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Re: Did the GOP tax plan help or hurt you?
« Reply #132 on: March 31, 2019, 01:32:33 PM »

- I don't think more money back to the people will result in getting them into a better financial state. I think the common action will be to blow their "refund"  and continue getting into debt, as evidenced by what I'm hearing: "what are you buying with your refund?", "I can't wait to treat myself once my refund comes back", etc.  How many more things do people need???


To be fair, that is good for the economy right up until the credit bubble bursts.

Yeah. Considering the average household credit card debt is around $5k, most people might choose to pay off their debt with the refund if they get it, but I'm assuming it's more likely they'll just blow it all on more crap with the refund because they're ok with it.

Some may pay the CCs and then just allow it to revolve back around and be in the same $5k debt the following year.

kingxiaodi

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Re: Did the GOP tax plan help or hurt you?
« Reply #133 on: April 01, 2019, 08:07:10 AM »
Finally filed for 2018. I think overall it helped a little, but last year was an anomaly for me in many ways so it's hard to compare apples to apples.

Spent almost half of 2018 without a job (most of which was on purpose), so the lower earnings meant the increase to a $12k standard deduction took a huge chunk off what I might have owed. Paid some of that savings back via the Shared Responsibility Payment since I elected to not carry insurance for ~2 months (this was a LOT less than I thought it would be - this penalty turns out to not have the sting that I was worried it would).

Suspect that I would have seen a much larger refund, except that I also sold some stock lots to come up with cash, GF and I bought a house last year. Capital gains to declare and be taxed on.

Was really unsure how the changes would play out for my situation, but in the end I got a Federal refund and owed the State money as usual (MA living up to its reputation!).

I feel like this "standard deduction" increase was one of the biggest scams in selling the plan. There isn't that big of a difference between the old standard deduction + personal exemption and the new standard deduction without a personal exemption.

Personal Exemption was $4400 IIRC? Standard deduction doubling to $12k means an additional $1600 deduction, which given the reduced income I had last year, represented a larger-than-usual percentage of income for the year. I suppose I could have clarified and said "huge marginal chunk" ;-).

I agree that the marketing of this scheme made this sound like a much bigger tax break than it actually was for many people. It definitely helped a bit on aggregate, though.

I believe the personal exemption was up to $4050 (visible on the 2017 1040 form, row 42). Your final result is correct (an individual filing Single gained ($12000-($6350+$4050)) = $1600 in deductions) because of another error: the standard deduction in 2017 was $6350, not $6000.

I agree that for an individual filing Single, the loss of the personal exemption was largely a wash. Filings with dependent children, however, lost $4050 in deductions. The child tax credit changed to compensate for this loss. I believe that filings with dependents who are not children (think elderly parent) simply lost this deduction with no corresponding gain (I could very well be wrong here).

Sugaree

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Re: Did the GOP tax plan help or hurt you?
« Reply #134 on: April 01, 2019, 08:47:24 AM »
Finally filed for 2018. I think overall it helped a little, but last year was an anomaly for me in many ways so it's hard to compare apples to apples.

Spent almost half of 2018 without a job (most of which was on purpose), so the lower earnings meant the increase to a $12k standard deduction took a huge chunk off what I might have owed. Paid some of that savings back via the Shared Responsibility Payment since I elected to not carry insurance for ~2 months (this was a LOT less than I thought it would be - this penalty turns out to not have the sting that I was worried it would).

Suspect that I would have seen a much larger refund, except that I also sold some stock lots to come up with cash, GF and I bought a house last year. Capital gains to declare and be taxed on.

Was really unsure how the changes would play out for my situation, but in the end I got a Federal refund and owed the State money as usual (MA living up to its reputation!).

I feel like this "standard deduction" increase was one of the biggest scams in selling the plan. There isn't that big of a difference between the old standard deduction + personal exemption and the new standard deduction without a personal exemption.

Personal Exemption was $4400 IIRC? Standard deduction doubling to $12k means an additional $1600 deduction, which given the reduced income I had last year, represented a larger-than-usual percentage of income for the year. I suppose I could have clarified and said "huge marginal chunk" ;-).

I agree that the marketing of this scheme made this sound like a much bigger tax break than it actually was for many people. It definitely helped a bit on aggregate, though.

I believe the personal exemption was up to $4050 (visible on the 2017 1040 form, row 42). Your final result is correct (an individual filing Single gained ($12000-($6350+$4050)) = $1600 in deductions) because of another error: the standard deduction in 2017 was $6350, not $6000.

I agree that for an individual filing Single, the loss of the personal exemption was largely a wash. Filings with dependent children, however, lost $4050 in deductions. The child tax credit changed to compensate for this loss. I believe that filings with dependents who are not children (think elderly parent) simply lost this deduction with no corresponding gain (I could very well be wrong here).

I believe that there was a dependent credit that was for dependents who are not children.  Was worth $500, maybe?

BTDretire

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Re: Did the GOP tax plan help or hurt you?
« Reply #135 on: April 01, 2019, 07:47:27 PM »
I got a little relief with the QBI, and saver credit is something new I think.
That Credit took $400 off my tax bill. Plus the lower rates, helped my tax bill.
 My total income was $81k not including $4.3k qualified dividends.
 Tax bill $788.00. That's 0.9%, other years have been 2%, 3% or 4%.
 Showing the huge advantage to having savings.
 I invest the savings into an HSA, 2-SEP's, 2-Roth/IRAs,
being self employed, we get to deduct our healthcare premium,
half our SS tax, and the QBI helped. But, we did have to pay both halves
of the SS.
As opposed to a retired friend that has $80k of RMDs plus other income that
is killing him at tax time.

kingxiaodi

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Re: Did the GOP tax plan help or hurt you?
« Reply #136 on: April 02, 2019, 07:02:25 AM »
Finally filed for 2018. I think overall it helped a little, but last year was an anomaly for me in many ways so it's hard to compare apples to apples.

Spent almost half of 2018 without a job (most of which was on purpose), so the lower earnings meant the increase to a $12k standard deduction took a huge chunk off what I might have owed. Paid some of that savings back via the Shared Responsibility Payment since I elected to not carry insurance for ~2 months (this was a LOT less than I thought it would be - this penalty turns out to not have the sting that I was worried it would).

Suspect that I would have seen a much larger refund, except that I also sold some stock lots to come up with cash, GF and I bought a house last year. Capital gains to declare and be taxed on.

Was really unsure how the changes would play out for my situation, but in the end I got a Federal refund and owed the State money as usual (MA living up to its reputation!).

I feel like this "standard deduction" increase was one of the biggest scams in selling the plan. There isn't that big of a difference between the old standard deduction + personal exemption and the new standard deduction without a personal exemption.

Personal Exemption was $4400 IIRC? Standard deduction doubling to $12k means an additional $1600 deduction, which given the reduced income I had last year, represented a larger-than-usual percentage of income for the year. I suppose I could have clarified and said "huge marginal chunk" ;-).

I agree that the marketing of this scheme made this sound like a much bigger tax break than it actually was for many people. It definitely helped a bit on aggregate, though.

I believe the personal exemption was up to $4050 (visible on the 2017 1040 form, row 42). Your final result is correct (an individual filing Single gained ($12000-($6350+$4050)) = $1600 in deductions) because of another error: the standard deduction in 2017 was $6350, not $6000.

I agree that for an individual filing Single, the loss of the personal exemption was largely a wash. Filings with dependent children, however, lost $4050 in deductions. The child tax credit changed to compensate for this loss. I believe that filings with dependents who are not children (think elderly parent) simply lost this deduction with no corresponding gain (I could very well be wrong here).

I believe that there was a dependent credit that was for dependents who are not children.  Was worth $500, maybe?
You are correct, a new $500 credit for dependents who are not children was introduced for 2018. Thanks for pointing that out! (I found it in the 1040 instructions on page 6 (What's New)).

(I do want to mention that I was confused by your tense use. I wasn't sure if you were saying that there used to be a dependent credit or if there is one now. It's still 2018 tax season after all!)

I got a little relief with the QBI, and saver credit is something new I think.
That Credit took $400 off my tax bill. Plus the lower rates, helped my tax bill.
 (snip)

Not sure if this saver's credit is what you mean, but if so, it is not new.

Sugaree

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Re: Did the GOP tax plan help or hurt you?
« Reply #137 on: April 02, 2019, 07:25:19 AM »
Finally filed for 2018. I think overall it helped a little, but last year was an anomaly for me in many ways so it's hard to compare apples to apples.

Spent almost half of 2018 without a job (most of which was on purpose), so the lower earnings meant the increase to a $12k standard deduction took a huge chunk off what I might have owed. Paid some of that savings back via the Shared Responsibility Payment since I elected to not carry insurance for ~2 months (this was a LOT less than I thought it would be - this penalty turns out to not have the sting that I was worried it would).

Suspect that I would have seen a much larger refund, except that I also sold some stock lots to come up with cash, GF and I bought a house last year. Capital gains to declare and be taxed on.

Was really unsure how the changes would play out for my situation, but in the end I got a Federal refund and owed the State money as usual (MA living up to its reputation!).

I feel like this "standard deduction" increase was one of the biggest scams in selling the plan. There isn't that big of a difference between the old standard deduction + personal exemption and the new standard deduction without a personal exemption.

Personal Exemption was $4400 IIRC? Standard deduction doubling to $12k means an additional $1600 deduction, which given the reduced income I had last year, represented a larger-than-usual percentage of income for the year. I suppose I could have clarified and said "huge marginal chunk" ;-).

I agree that the marketing of this scheme made this sound like a much bigger tax break than it actually was for many people. It definitely helped a bit on aggregate, though.

I believe the personal exemption was up to $4050 (visible on the 2017 1040 form, row 42). Your final result is correct (an individual filing Single gained ($12000-($6350+$4050)) = $1600 in deductions) because of another error: the standard deduction in 2017 was $6350, not $6000.

I agree that for an individual filing Single, the loss of the personal exemption was largely a wash. Filings with dependent children, however, lost $4050 in deductions. The child tax credit changed to compensate for this loss. I believe that filings with dependents who are not children (think elderly parent) simply lost this deduction with no corresponding gain (I could very well be wrong here).

I believe that there was a dependent credit that was for dependents who are not children.  Was worth $500, maybe?
You are correct, a new $500 credit for dependents who are not children was introduced for 2018. Thanks for pointing that out! (I found it in the 1040 instructions on page 6 (What's New)).

(I do want to mention that I was confused by your tense use. I wasn't sure if you were saying that there used to be a dependent credit or if there is one now. It's still 2018 tax season after all!)

I got a little relief with the QBI, and saver credit is something new I think.
That Credit took $400 off my tax bill. Plus the lower rates, helped my tax bill.
 (snip)

Not sure if this saver's credit is what you mean, but if so, it is not new.

Sorry.  I've closed out my taxes for last year and have already moved on to planning for this year. 

BTDretire

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Re: Did the GOP tax plan help or hurt you?
« Reply #138 on: April 02, 2019, 11:23:44 AM »

Sorry.  I've closed out my taxes for last year and have already moved on to planning for this year.

 Well, I'm in that mode now, I finally got all my dividend generators into tax advantaged accounts.
 I tried to get rid of a property that generates $12k a year of interest, but that didn't pan out, so another 3 years of that.
 My taxed accounts in VTSAX will generate about $9k + the $12k is $21k.
 I'll need to sell some tax advantaged VTSAX to get me to $36k of money for expenses.
After that I want to maximize Roth conversions up to the 12% bracket.
 Any advice is appreciated.

StarBright

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Re: Did the GOP tax plan help or hurt you?
« Reply #139 on: April 03, 2019, 11:27:51 AM »
Just finished - hurt us - effective tax rate up.

We have crazy high property and local taxes and no reciprocity for county taxes (we're taxed where we live and where we work). I'm also a remote worker and pay full state taxes plus remote work penalties to both states and counties (just my state/county tax rate is 14%). The 10k SALT limit, and *removal of charity deductions and loss of miscellaneous deductions when it came to research expenses for my husband hurt us.

The child tax credit offset it a bit - but not enough. Household income is just under 120k, 2 kids.

*Edited to add correction - I worded it poorly: not removal of charity, just that we don't do enough in charity to help us with the new tax plan.
« Last Edit: April 12, 2019, 09:55:29 AM by StarBright »

robartsd

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Re: Did the GOP tax plan help or hurt you?
« Reply #140 on: April 04, 2019, 09:25:54 AM »
removal of charity deductions
Was this a state or local change, I hadn't heard of any federal removal of charitable deductions? At the federal level, the higher standard deduction does reduce who saves by itemizing which can remove the benefit of charitable donations for some people, but if mortgage interest and SALT deductions fill your standard deduction anyway, I believe charitable donations are just as beneficial on federal taxes as they always have been.

sol

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Re: Did the GOP tax plan help or hurt you?
« Reply #141 on: April 04, 2019, 09:36:26 AM »
I believe charitable donations are just as beneficial on federal taxes as they always have been.

You now need twice as much in deductions in order to realize the first dollar of benefit from itemizing, which increases the effective tax rate for middle class households.  If you're donating hundreds of thousands of dollars per year to charity, then I agree that the new tax law didn't affect you as much.

StarBright

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Re: Did the GOP tax plan help or hurt you?
« Reply #142 on: April 04, 2019, 09:41:46 AM »
Great question! I'll ask my husband, he mentioned something about "bunching" and it not working out for us. I think we don't give enough? We only donate about 5k a year.

sol

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Re: Did the GOP tax plan help or hurt you?
« Reply #143 on: April 04, 2019, 10:06:40 AM »
Great question! I'll ask my husband, he mentioned something about "bunching" and it not working out for us. I think we don't give enough? We only donate about 5k a year.

Some people (usually rich people) attempt to "bunch" all of their deductions into a single year, and then claim the standard deduction the rest of the time.

For example, if you're MFJ then your standard deduction is $24k in any given year and if you only have $10k of itemized deductions (charitable contributions, etc) then in any given year you're charitable donations aren't tax deductible anymore because they don't exceed the standard deduction you're going to get anyway.  But you can donate the exact same total amount if you give $30k to charity this year and then zero for the next two years, while claiming the $30k deduction this year and then the $24k standard deduction the next two years.  Over the course of the three year cycle, you would pay less taxes by giving 3x as much 1/3 as often than you would pay if you gave the same amount every year.

The newly increased standard deduction was designed to be slightly above the average amount that middle class families itemize, to force them into the ("simplified") standard deduction.  So you'd think that millions of middle class families would benefit from this bunching strategy, but the problem is that most of those itemized deductions aren't charitable donations that can be easily moved from one year to the next.  For most of us, a big chunk of our itemized deductions are mortgage interest and property taxes, and most jurisdictions explicitly prohibit you from deferring or prepaying those to move them into a different tax year.

Wealthy families with more than $24k in itemized deductions can still itemize every year, but they only receive benefit for the amount of their deductions that exceed 24k, instead of the amounts over 12k like it was before.  So a family that makes 150k and itemizes 25k per year now gets 1k of benefit instead of 13k of benefit, which is not nothing but it's not nearly as good as it was before.  At the same ratios a family that makes 1.5million and itemizes 250k per year now gets 226k of benefit instead of 238k of benefit.  So in terms of overall effective tax rates, the newly increased standard deductions means very little to super rich people, but is a dramatic cut to families with more moderate incomes.

travelawyer

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Re: Did the GOP tax plan help or hurt you?
« Reply #144 on: April 04, 2019, 10:21:14 AM »
I'm surprised no one has mentioned the elimination of the marriage penalty.  With two high-earners, that produced the most savings for us (we had about $15k savings from last year overall with similar incomes).  The elimination of the marriage penalty is the one part of the tax changes that I support--taxes have no business incentivizing some marriages (single or very disproportionate income) but not others (dual-income). I still held a grudge against my DH for not letting us get civil-union instead of married, for the tax savings, which I can now finally let go of. :) I know of other high-income couples that have avoided marriage for the same reason.

StarBright

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Re: Did the GOP tax plan help or hurt you?
« Reply #145 on: April 04, 2019, 10:48:56 AM »
thanks @sol , excellent explanation!

robartsd

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Re: Did the GOP tax plan help or hurt you?
« Reply #146 on: April 04, 2019, 01:14:30 PM »
I believe charitable donations are just as beneficial on federal taxes as they always have been.

You now need twice as much in deductions in order to realize the first dollar of benefit from itemizing, which increases the effective tax rate for middle class households.  If you're donating hundreds of thousands of dollars per year to charity, then I agree that the new tax law didn't affect you as much.
Clasic Sol quoting out of context - the clipped part of the sentence quoted addressed that.

sol

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Re: Did the GOP tax plan help or hurt you?
« Reply #147 on: April 04, 2019, 01:26:52 PM »
Clasic Sol quoting out of context - the clipped part of the sentence quoted addressed that.

I wasn't disagreeing, only expanding upon your point by providing a little more detail.

Not everyone who quotes you is trying to argue.
« Last Edit: April 04, 2019, 01:29:22 PM by sol »

Poundwise

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Re: Did the GOP tax plan help or hurt you?
« Reply #148 on: April 04, 2019, 02:04:13 PM »
Great question! I'll ask my husband, he mentioned something about "bunching" and it not working out for us. I think we don't give enough? We only donate about 5k a year.

We opened a DAF (Donor Advised Fund) through TIAA-CREF to do just this.  Unfortunately, even though I tried to have discipline in Year 2 and only use the DAF, it meant that I was cutting down on small impulse donations (i.e. $25 for a friend's walkathon, in-kind donations) or else not being able to deduct them.

walkerjks

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Re: Did the GOP tax plan help or hurt you?
« Reply #149 on: April 06, 2019, 05:39:14 AM »
I assume we're just talking straight taxes paid and ignoring the trillion dollars the tax cut added to our national debt..,

My family benefited overall.  Reduction in marginal tax rates from 15% to 12% helped.  Loss of exemptions for our kids was more than offset by higher child credit.  And more of our income than I expected qualified for the 20% QBI reduction (which given we're in the 12% tax bracket... 0.12 * 0.20 = 0.024... which isn't much, but it's something).

This tax cut still makes no rational sense.