Tax Bill

[Elessar78]

49 minutes ago, Forehead said:

Tax guy arrives in 10 minutes...I feel like I'm being led to the firing squad, based on what is being posted in here.

Well to keep with the analogy you don't know if you'll be hit with a crossbow or a modern firearm. Maybe even a rail gun. So there's that. Or, like me, you were the target but you managed to dodge the projectile unwittingly. 

51 minutes ago, techboy said:

 

Dude, the standard exemption was raised to 12,000 per person. That means a married couple filing jointly gets a $24,000 deduction, right off the bat. 

 

Sorry, just to be more clear the standard deduction for a single person was raised to $12,000. 

 

Also, personal exemptions (which could be substantial) were also eliminated. So for Married, filing jointly the $24,000 standard deduction could be a wash without the exemptions. 

[Elessar78]

59 minutes ago, HOF44 said:

Just pray your kids and child expenses save you, its your only hope!!

Yeah, our child care is off the books unfortunately—that would be huge $$ for us. 

[techboy]

27 minutes ago, Elessar78 said:

Sorry, just to be more clear the standard deduction for a single person was raised to $12,000. 

 

Also, personal exemptions (which could be substantial) were also eliminated. So for Married, filing jointly the $24,000 standard deduction could be a wash without the exemptions. 

 

You are correct about my sloppy vocabulary. I have edited.

 

The other point is also true, to an extent, but doesn't really impact the analysis because everybody lost the exemptions whether they itemize or not. It still takes $24,000 of deductions to reach the point where the SALT cap matters, and such a person is going to be, as I noted, pretty well off at the very least. 

[Forehead]

Well, it wasn't ideal, but it wasn't awful.  Net between Federal and State was -$900 or so.  Last year was -$300.  Most of our stuff was a wash from last year.  What got us was that our combined income jumped up thanks to my wife finishing her grad degree and getting promoted, but we no longer had tuition to claim, and we never changed our withholding.  Might need to look into that.

[PleaseBlitz]

32 minutes ago, Forehead said:

Well, it wasn't ideal, but it wasn't awful.  Net between Federal and State was -$900 or so.  Last year was -$300.  Most of our stuff was a wash from last year.  What got us was that our combined income jumped up thanks to my wife finishing her grad degree and getting promoted, but we no longer had tuition to claim, and we never changed our withholding.  Might need to look into that.

 

I could be wrong, but I think the withholding tables changed even without you doing anything.  The cynical POV is that the administration wanted it to immediately look like taxes were cut, but this also had the effect of making refunds less. 

 

When I get mine done, I'll crunch the numbers.  Should be a good comparison year over year,  my income stayed the same (although it was less bonus and more salary), other than that, everything stayed the same. 

[Elessar78]

On 2/11/2019 at 9:54 AM, 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.

Same with us. We save money into a savings account, retirement accounts, college funds, etc and we were getting minimal refunds or owing a very small amount to the gov't. In 2017 we overwithheld and we enjoyed having that surplus. Our week to week life had not changed—so why not also get that "bonus" check in the spring. 

 

2017 may also have been a good year to have that extra money going into, say, our index funds. But in a savings account the return would've been paltry anyway. 

[Larry]

31 minutes ago, techboy said:

 

Dude, the standard exemption was raised to 12,000 per person. That means a married couple filing jointly gets a $24,000 deduction, right off the bat. 

 

The person in California, or D.C., or New York, or whatever who is actually impacted by the SALT cap needs to have enough deductions to eclipse $24,000, and for them to be significantly impacted, it needs to be a lot more than that. Such a person is, if not wealthy, VERY well off.

 

The waitress in Mobile is not going to be affected by that, but yes, the attorney living in San Francisco probably is (sorry @Predicto).

 

If you give the attorney in San Francisco a tax break that the waitress in Mobile doesn't (and can't) get, then the waitress is subsidizing the attorney, even though the attorney is already paying WAY more in taxes than the waitress.

 

Likewise, if the law uncapped the deduction on mortgage interest so that billionaires could take deductions on the mortgages they would suddenly acquire for their mansions, that would mean that the rest of us would be subsidizing their estates, even though they pay WAY more than they get back.

 

If you don't like having your arguments called simplistic, don't make simplistic arguments with patronizing smileys.

 

 

 

Excellent. Your argument has become less simplistic. 

 

And not coincidentally, I agree with you. For example, I don't have a problem with thinking of the mortgage interest deduction as a subsidy for people, despite the fact that it's technically not true. And I'm familiar enough with the way the math works to know that (especially when it's not capped), it's a subsidy which gives much bigger subsidies to, let's call it the "well above average" class. 

 

But now we're not talking about Alabama subsidizing California, we're talking about the below average taxpayer subsidizing the well above average. 

 

But that then leads to a different flaw with your point. 

 

Yes, a can see the point that maybe Joe Sixpack is unfairly subsidizing Predicto (let's put names on these demographics). 

 

But you don't fight that problem by raising Predicto's taxes, while slashing those on Bill Gates. The GOP tax bill shifted taxes (some). But I don't really think it's fair to pretend that the mission was to make taxation more progressive. 

[techboy]

1 minute ago, Larry said:

But you don't fight that problem by raising Predicto's taxes, while slashing those on Bill Gates. The GOP tax bill shifted taxes (some). But I don't really think it's fair to pretend that the mission was to make taxation more progressive. 

 

Now go back and read the entire post that you apparently misunderstood. You might find that this point was addressed as well.

[Springfield]

26 minutes ago, PleaseBlitz said:

 

I could be wrong, but I think the withholding tables changed even without you doing anything.  The cynical POV is that the administration wanted it to immediately look like taxes were cut, but this also had the effect of making refunds less. 

 

When I get mine done, I'll crunch the numbers.  Should be a good comparison year over year,  my income stayed the same (although it was less bonus and more salary), other than that, everything stayed the same. 

 

Yes, my withholdings stayed the same but I received more back on an equivalent paycheck (because of less federal tax withdrawn).  So, I got a little more each paycheck... but I was also taxed more at the end of the year.

[PleaseBlitz]

3 minutes ago, Springfield said:

 

Yes, my withholdings stayed the same but I received more back on an equivalent paycheck (because of less federal tax withdrawn).  So, I got a little more each paycheck... but I was also taxed more at the end of the year.

 

Are you able to figure out your effective tax rate for both years?

[Springfield]

33 minutes ago, PleaseBlitz said:

 

Are you able to figure out your effective tax rate for both years?

 

Yeah, I posted them a few pages back:

 

2013:  8.86%

2014:  9.12%

2015:  10.02%

2016:  7.51%

2017:  9.92%

2018:  11.95%

 

Now, that is my wife and I.  In 2014 we had kid 1 and in 2016 we had kid 2.  Last 3 years, our income has increased marginally.  Between this year and last, we increased our income 3%.  Haven’t done the data from 16 to 17.  16 we bought and sold a house so they probably explains the low overall tax rate then, but both 17 and 18 were generally flat across the board.  Certainly nothing to explain a jump in tax liability of 20% (except the Trump tax scam).

[PleaseBlitz]

Thanks.

[Elessar78]

40 minutes ago, Springfield said:

 

 Last 3 years, our income has increased marginally.  Between this year and last, we increased our income 3%.  

Thanks Trump

 

[tshile]

4 hours ago, Elessar78 said:

What? No. The Child Tax credit is only for $2K per child. 

Edit: I see my mistake. Sorry. 

1 hour ago, PleaseBlitz said:

 

Are you able to figure out your effective tax rate for both years?

 

This is the only thing that matters. 

Edited February 14, 2019 by tshile

[HOF44]

My effective rate history. I'll post this year when I finally finish it.

 

 

[bearrock]

2 hours ago, Larry said:

But you don't fight that problem by raising Predicto's taxes, while slashing those on Bill Gates. The GOP tax bill shifted taxes (some). But I don't really think it's fair to pretend that the mission was to make taxation more progressive. 

 

@techboy has been pretty clear in these pages as not being a fan of the Trump tax plan.  I think the blue state/high SALT limit making sense was in the context of how it might be worth it for a worthy goal, not for what the GOP used it for.  His posts in previous pages were pretty clear about criticizing the TCJA.  

[MartinC]

3 hours ago, techboy said:

 

You are correct about my sloppy vocabulary. I have edited.

 

The other point is also true, to an extent, but doesn't really impact the analysis because everybody lost the exemptions whether they itemize or not. It still takes $24,000 of deductions to reach the point where the SALT cap matters, and such a person is going to be, as I noted, pretty well off at the very least. 

 

I don't FEEL very well off.

[PleaseBlitz]

My rate history is:

 

2014:  17.41

2015:  16.46 <---had a kid this year.

2016:  19.58

2017:  22.01

 

 

 

[The Evil Genius]

5 hours ago, techboy said:

 

The person in California, or D.C., or New York, or whatever who is actually impacted by the SALT cap needs to have enough deductions to eclipse $24,000, and for them to be significantly impacted, it needs to be a lot more than that. Such a person is, if not wealthy, VERY well off.

 

 

 

Maybe. Strong middle class for the region, definitely. Have you looked at what's considered lower class income in the Bay Area now?A family earning about 117k (according to Fortune magazine) a year or less.

 

I can only speak for me though. 

We have a 3 year old loan on a house we put 20% down on. We paid $16k in interest in 2018. 9k+ in property taxes and god knows what total in state income tax. It's very easy here to exceed that 10k SALT limit and still have to itemize on the return so you don't get ****ed even harder by the "tax cuts".  If I had to guess, we will be missing out on about 5-7k+ (taxed at 24% since it's basically the last part of the taxed income) in deductions because of the SALT limit starting this year. Although I'm unsure if joint filing separately allows for a workaround, especially since California is a community property state (for income purposes).

Edited February 14, 2019 by The Evil Genius

[The Evil Genius]

Our last 4 tears effective tax rate (not including this year since it's not known at the moment).

 

2014 - 13.34%

2015 - 13.45%

2016 - 12.41%

2017 - 12.81%

2018 - ????

 

Also as an aside...what's the argument again for federally taxing state income tax refunds in the following year? 

Edited February 14, 2019 by The Evil Genius

[Elessar78]

I've seen the stat that refunds are down 9% so far this year. 

 

I haven't seen/found a stat of what how much everyone's effective tax rate has risen/gone down. 

[PleaseBlitz]

1 minute ago, Elessar78 said:

I've seen the stat that refunds are down 9% so far this year. 

 

I haven't seen/found a stat of what how much everyone's effective tax rate has risen/gone down. 

 

9% in terms of the % of people that got one, or 9% in terms of the total amount?

[Elessar78]

Refunds are 9% lower than they were last year, so far.

 

https://www.washingtonpost.com/business/2019/02/14/irs-says-average-tax-refund-is-down-percent-so-far-this-year/?utm_term=.73b602580e1d

[techboy]

1 hour ago, The Evil Genius said:

 

Maybe. Strong middle class for the region, definitely. Have you looked at what's considered lower class income in the Bay Area now?A family earning about 117k (according to Fortune magazine) a year or less.

 

Oh, I know. On one of the personal finance boards I frequent there was a younger woman making 185k and asking about buying in the Bay Area. The consensus was she couldn't afford it.

 

Still, a family making 117k in the Bay Area is very unlikely to have 24k in deductions, and almost certainly doesn't own, so probably no 10k in SALT either.

1 hour ago, MartinC said:

 

I don't FEEL very well off.

 

You probably make at least $20,000 more a year than I do (I'm a teacher). That makes you rich.

 

Those are the rules. 20 years older than whatever I am is old, $20,000 more than whatever I earn is rich.

 

it's fair... I adjust for inflation every year.

[The Evil Genius]

26 minutes ago, techboy said:

 

Oh, I know. On one of the personal finance boards I frequent there was a younger woman making 185k and asking about buying in the Bay Area. The consensus was she couldn't afford it.

 

Still, a family making 117k in the Bay Area is very unlikely to have 24k in deductions, and almost certainly doesn't own, so probably no 10k in SALT either.

 

I was curious so I had to look back  and in FY013 we had about 120k in taxable income with 9800 in SALT deductions. Another 10k in mortgage interest. So it's possible..but I understand your argument. 

 

 

Edited February 14, 2019 by The Evil Genius