Tax Bill

[Burgold]

2 minutes ago, tshile said:

 

 

 

I think the the bill is bad and my rough math has me at best breaking even, and likely paying more, but the sheer amount of misinformation and the fundamental misunderstanding of how taxes work in this country by (what seems to be a majority of) people and the media is laughable and frustratingly ridiculous. 

But isn't that part of the problem? I thought a major component of this tax reform was supposed to be an attempt to simplify the tax code. I remember that being a major complaint anyway as the reform was being debated (if you can actually debate something where only one side was invited and even the party in power wasn't allowed to read what was being proposed until after the vote.)

[TheGreatBuzz]

While this doesn't specifically apply to this year and the new law, it does explain why people are upset about the lower refund.

 

More often than not when I would do financial counseling with people I would include looking at their taxes.  For people that were used to getting huge refunds, I would often suggest they change their witholdings.  I would often advise them that their goal should be to get as close to zero as possible for the amount they get/pay.  They would say how they loved getting that big check every year though.  I'd explain to them that they are just giving the government an interest-free loan and they.  They would be better off adjusting their witholdings and putting the extra money in a savings account.  Then at the end of the year they would still have that money except it would have accrued interest (although not much).  Almost everyone said they didn't have the discipline for that and looked at the refund as a bonus check.

[HOF44]

Also lost in this is both can be true.  You can have had less taken out and withholdings and your taxes can have gone up.  I don't really care about the withholding thing personally, the number I watch is taxes owed.  I seem to have been the the target demographic to hurt with this bill.  High cost of living blue areas will get hammered by this unless you're rich enough to be in the yacht set.  

[twa]

Mine should be lower from the estimates, we will see since self employed is a bit different.

[Forehead]

34 minutes ago, TheGreatBuzz said:

Almost everyone said they didn't have the discipline for that and looked at the refund as a bonus check.

 

Yeah, there's a lot of truth here.  When my wife and I were getting large refunds years ago, we thought about changing our withholding.  We're both pretty fiscally responsible, but not having that money around for things like car repairs, etc. forced us to budget on what we did have, and the tax refund checks always came around when it was time to start paying fees for the kids summer camp, etc.  So we looked at it as having the government hold our camp fees, etc. aside for us, even though it was interest free

 

The refunds drying up just means we have to re-budget, but it was nice for awhile not having to worry about paying for that stuff.

Edited February 11, 2019 by Forehead

[Zguy28]

2 minutes ago, Forehead said:

 

Yeah, there's a lot of truth here.  When my wife and I were getting large refunds years ago, we thought about changing our withholding.  We're both pretty fiscally responsible, but not having that money around for things like car repairs, etc. forced us to budget on what we did have, and the tax refund checks always came around when it was time to start paying fees for the kids summer camp, etc.  So we looked at it as having the government hold our camp fees, etc. aside for us, even though it was interest free

 

The refunds drying up just means we have to re-budget, but it was nice for awhile not having to worry about paying for that stuff.

The key is when you alter your witholding, immediately enact your saving plan. Procrastination is enemy of discipline. 

[Renegade7]

@tshile and @Zguy28 all I did was post the article because I found that quote interesting.  Saying they made more throughout the year doesnt negate the lack of communication on the smaller to no refunds.  This is going to go down like "you can keep your doctor " . 

 

People plan on them being a certain size, a shock like that comes from GOP not wanting to want them about its and that's messed up.  Same article shows people with same jobs and house losing $3k from last years refund.  That's not cool.

[tshile]

1 hour ago, Burgold said:

But isn't that part of the problem? I thought a major component of this tax reform was supposed to be an attempt to simplify the tax code. I remember that being a major complaint anyway as the reform was being debated (if you can actually debate something where only one side was invited and even the party in power wasn't allowed to read what was being proposed until after the vote.)

 

It does simplify it in the sense that it replaced some deductions and such with a general standard deduction increase

 

i don’t know how much it actually simplified things when you net it all out. 

 

And while I think a simplified tax code would be nice in many ways, I don’t measure it based on how well the general public understands it. Because as far as I can tell the general public doesn’t understand anything about taxes. Most people I know don’t even know the difference between a tax deduction and a tax credit. And very few seem to understand what their effective tax rate is. 

 

I’m willing to bet most people don’t even understand how you would calculate the difference between these two plans much less actually do it. 

 

If someone has a difference of 10k in deductions do they know that they need to get their difference in tax rates for the tier that falls in and do the math? Then figure out the changes in credits they qualify for? Then factor in their life changes and how it would/wouldn’t apply to the old/new rules?

 

doesnt seem like it to me. The math isn’t overly complicated but from what I can tell most people get to “I lost x in deductions” and that’s where they stop. And that doesn’t mean much. 

 

The article that was posted had to explain that what you owe/get back when you file isn’t “what you pay in taxes” because you also have to factor in with holdings. 

 

Thats the level of understanding most people appear to have to me. That is : very very little understanding. 

Edited February 11, 2019 by tshile

[tshile]

1 hour ago, TheGreatBuzz said:

I would often suggest they change their witholdings.  I would often advise them that their goal should be to get as close to zero as possible for the amount they get/pay.  They would say how they loved getting that big check every year though.  I'd explain to them that they are just giving the government an interest-free loan and they. 

 

That’s why people who know what they’re doing and are financially responsible set it so they owe taxes

 

while people who like getting a big check are giving the government an interest free loan, the rest of us are borrowing money interest free

 

gotta be able to write that check in April though. 

 

[tshile]

1 hour ago, HOF44 said:

High cost of living blue areas will get hammered by this unless you're rich enough to be in the yacht set. 

 

Specifically high local tax areas. 

 

Theres and entire concersation to be had about that and our side isn’t exactly on the right. It’s a matter of opinion

 

youre getting services for that money, why should you also get a tax deduction for payin for those services? If you want lower taxes then vote for lower state and local taxes. You will lose services. 

 

Its an interesting conversation when you find someone willing and capable of having it. 

 

Schools, roads, trash, environmental things all fall into those services and SALT taxes. So does paying for a large local beuracracy to run it. 

 

Its not cut and dry and there isn’t one answer because it’s sort of a preference of where and how you want your money to go. 

 

But youre “punishment” includes having access to those services. You’re just not getting a break for paying for them anymore. 

 

Others would argue the old system punished them for not wanting/having those things. 

36 minutes ago, Renegade7 said:

@tshile and @Zguy28 all I did was post the article because I found that quote interesting.  Saying they made more throughout the year doesnt negate the lack of communication on the smaller to no refunds.  This is going to go down like "you can keep your doctor " . 

 

People plan on them being a certain size, a shock like that comes from GOP not wanting to want them about its and that's messed up.  Same article shows people with same jobs and house losing $3k from last years refund.  That's not cool.

 

I was killing the article not you. Specifically the author. 

 

As for the rest of your post - it’s not my problem nor my concern that other people don’t understand their taxes or cannot be financially responsible enough to deal with changes. 

 

Its on them to figure this out and theres plenty of resources available for them to figure it out. 

 

They want their hand held. They are adults, I don’t care that someone isn’t there to hold their hands. 

[The Evil Genius]

We will pay $9,430 property taxes this year. So we will easily bump against that 10k SALT limit when income taxes are factored in. We will still itemize due to 16K+in mortgage interest...but we have effectively lost 10+k in deductions that I suspect won't be made up with the new tax rates. I'd imagine I'm on the low end for a lot of people that live in the greater SF Bay Area. 

 

I personally don't understand the motive behind the 10k SALT limit other than what I suspect was a targeted punishment enacted  by the GOP towards coastal high income (liberal) areas.

Edited February 11, 2019 by The Evil Genius

[tshile]

3 minutes ago, The Evil Genius said:

I personally don't understand the motive behind the 10k SALT limit other than what I suspect was a targeted punishment enacted  by the GOP towards coastal high income (liberal) areas.

 

It causes that income to be 'taxed twice', which will make it harder for the dems that control the area to push their policy ideas (which is usually higher taxes in exchange for certain services.)

 

If you're for that stuff you probably view it as an attack/punishment.

 

If you're not, you probably view it as correct something that shouldn't have been in place to begin with (lowering your federal tax obligation because you pay more for your schools, your environment, your trash, for poor people in your area, etc etc)

 

 

[The Evil Genius]

But that assumes that high property taxes are a result of extra services and not just high property costs (due to limited supply with high demand and/or state laws that encourage people not to sell thus driving supply even lower).

 

Also, the GOP had no problem doubling the child tax credit..so they are for more kids but less high serviced areas? 🤔

 

 

Edited February 11, 2019 by The Evil Genius

[tshile]

10 minutes ago, The Evil Genius said:

But that assumes that high property taxes are a result of extra services and not just high property costs (due to limited supply with high demand and/or state laws that encourage people not to sell this driving supply even lower).

 

Yeah, it does. 

 

Outside of wealthy retreat areas (lake or beach property, or something like that) areas I can’t think of a high tax areas are tied to extra services

 

I’m not saying they don’t exist, I just can’t think of one

 

these places usually have the more liberal policies and higher funding for schools,  services for the poor, etc. 

 

i would suggest these areas are also more likely to have higher wages and higher state income tax, and higher personal property tax, and that basically everything chips away at that 10k SALT cap. So if you’re doing reasonably well (not living pay check to pay check) you’re probably hurt by this. 

 

People with more than 2 kids are also hurt by this, but that also is an interesting conversation. Should you owe less in taxes simply because you have more kids? I don’t think that’s cut and dry either. 

Edited February 11, 2019 by tshile

[The Evil Genius]

6 minutes ago, tshile said:

 

Yeah, it does. 

 

Outside of wealthy retreat areas (lake or beach property, or something like that) areas I can’t think of a high tax areas are tied to extra services

 

I’m not saying they don’t exist, I just can’t think of one

 

these places usually have the more liberal policies and higher funding for schools,  services for the poor, etc. 

 

But does that make sense to punish them? It means less reliance on federal dollars in those areas no? And more dollars flowing into the federal government because of higher incomes. Or maybe I'm overthinking it. 

 

Also I haven't looked..but does anyone know if SALT deductions (specifically property tax) and then outside of that (things like mortgage interest) for married couples can be split evenly? If I'm not mistaken the 10k limit was for both joint and single filers. Would married filing seperately be even a better option? ****..now I'm going to have to do taxes 2 different ways just to compare. Simplification, my ass. 😁

Edited February 11, 2019 by The Evil Genius

[tshile]

1 minute ago, The Evil Genius said:

But does that make sense to punish them? It means less reliance on federal dollars in those areas no? And more dollars flowing into the federal government because of higher incomes. Or maybe I'm overthinking it. 

 

I don’t think you’re overthinking it and I tend to be more on your side. 

 

Why would you prefer more money go to federal government to make decisions about your schools and your roads and how to deal with your poor people?

 

especially when the federal government in many cases is just handing that money back to your state and county with guidelines attached?

 

id rather my money go to the people running my county where my vote is a significantly large %in deciding who gets to make those decisions. And those people have to live in the county they’re making these decisions about. 

 

The flip side of that argument is why should you get lower federal taxes and I don’t, just because you voted to have a larger local government to run more government programs and funnel more money into your schools, trash, poor, etc.

 

Remember, most of the people that want that also don’t want the federal government having the power it has over these things. So your argument that the feds are just doing it for them doesn’t work, as they don’t want that either. 

[Zguy28]

1 hour ago, Renegade7 said:

@tshile and @Zguy28 all I did was post the article because I found that quote interesting.  Saying they made more throughout the year doesnt negate the lack of communication on the smaller to no refunds.  This is going to go down like "you can keep your doctor " . 

 

People plan on them being a certain size, a shock like that comes from GOP not wanting to want them about its and that's messed up.  Same article shows people with same jobs and house losing $3k from last years refund.  That's not cool.

Sorry, while I also saw a significant reduction to almost even, I'm more concerned why my taxes owed to Maryland increased 400% over my 2017 return. I must be paying into the free tuition fund or something. Glad I was ready.

[LD0506]

[Springfield]

My actual tax rate was up by 3% over last year and up 5% on some other years.

[PleaseBlitz]

10 minutes ago, Springfield said:

My actual tax rate was up by 3% over last year and up 5% on some other years.

 

Welcome to Screwed Town.  Population: You.  

 

 

PS, let me know how the weather is, I'll probably be joining you in Screwed Town shortly.  

[Springfield]

11 minutes ago, PleaseBlitz said:

 

Welcome to Screwed Town.  Population: You.  

 

 

PS, let me know how the weather is, I'll probably be joining you in Screwed Town shortly.  

 

Well I mean on the last page there was a lot of talk of apples/oranges comparison and digression.

 

Is an actual tax rate comparison not an apples/apples comparison?  Total tax due divided by total gross income.  Seems pretty standard to me.

 

And the whole conversation about how you should actually owe and if you get a refund then you’re a idiot for giving the government a free loan can suck a bag of dicks.  I like getting a nice little bump of cash at the beginning of the year.  If I didn’t over-withhold then I’d just end up wasting that money on frivolous BS like my kids or something.

[PleaseBlitz]

14 minutes ago, Springfield said:

 

Well I mean on the last page there was a lot of talk of apples/oranges comparison and digression.

 

Is an actual tax rate comparison not an apples/apples comparison?  Total tax due divided by total gross income.  Seems pretty standard to me.

 

And the whole conversation about how you should actually owe and if you get a refund then you’re a idiot for giving the government a free loan can suck a bag of dicks.  I like getting a nice little bump of cash at the beginning of the year.  If I didn’t over-withhold then I’d just end up wasting that money on frivolous BS like my kids or something.

 

I think it's apples to apples UNLESS your situation changed significantly (e.g., you made significantly more money or moved from employer-employed to self-employed or you sold a bunch of stock or you retired or had a kid).  

[twa]

Mine ran about the same as last year, did get dinged for underpayment on estimated taxes though.

 

 

[Springfield]

Just now, twa said:

Mine ran about the same as last year, did get dinged for underpayment on estimated taxes though.

 

 

 

In other words, no tax cut for one of the board’s staunchest conservatives.

[tshile]

1 hour ago, Springfield said:

And the whole conversation about how you should actually owe and if you get a refund then you’re a idiot for giving the government a free loan can suck a bag of dicks.

 

Youre not an idiot. Especially if you’re knowingly making that decision. It’s a choice. 

 

But generally taking interest free loan > giving interest free loan