Continuation of personal tax discussion

[WVUBRU]

A week or so ago, we had a thread about the impact of the new tax law on individuals and admittedly, I was in a world of confusion how it was going to impact me. Now, I'm no longer confused. What I feared is indeed true and I'm guessing it will also impact others in a similar manner.

During the past 2o years, my federal effective tax rate has fluctuated from 8.5% to 11%. 2017, it was 9.8%. I estimated withholding where it should have shaken out around 10.9%. My estimated taxes is going to be around 14.3%. That is a pretty significant tax increase and my income from 2017 to 2018 is relatively flat so the only thing that changed is the tax law.

If you are in the upper middle class and married file jointly with more than the average of 1.5 children, expect the same kind of effect.

 

[dave]

Im guessing the increase is caused mostly by having less deductions?

 

[WVUCOOPER]

A week or so ago, we had a thread about the impact of the new tax law on individuals and admittedly, I was in a world of confusion how it was going to impact me. Now, I'm no longer confused. What I feared is indeed true and I'm guessing it will also impact others in a similar manner.

During the past 2o years, my federal effective tax rate has fluctuated from 8.5% to 11%. 2017, it was 9.8%. I estimated withholding where it should have shaken out around 10.9%. My estimated taxes is going to be around 14.3%. That is a pretty significant tax increase and my income from 2017 to 2018 is relatively flat so the only thing that changed is the tax law.

If you are in the upper middle class and married file jointly with more than the average of 1.5 children, expect the same kind of effect.

You accounting for CTC? Most increases are coming to taxpayers with no eligible kids. That I've seen. I obviously have NO idea on your taxes, just speaking in generalities.

 

[WVUBRU]

Im giessing the increase is caused mostly by having less deductions?

Biggest impact that is relative to all families is the elimination of exemptions making my pretax income much higher.

 

[WVUCOOPER]

Im guessing the increase is caused mostly by having less deductions?

For ********most******** taxpayers, it's just a shell game. Lose exemptions, increase CTC or gain family tax credit.

 

[WVUBRU]

You accounting for CTC? Most increases are coming to taxpayers with no eligible kids. That I've seen. I obviously have NO idea on your taxes, just speaking in generalities.

My children that would have been exemptions are over 17 which I believe is the cutoff age. Please correct me if I'm not correct.

 

[dave]

Biggest impact that is relative to all families is the elimination of exemptions making my pretax income much higher.

That was what I was figuring.

It will be the opposite for people around me simply because property taxes are so much lower.

My mortgage interest is much higher than my property taxes and I would assume my interest is in roughly the same range as most folks.

 

[dave]

For ********most******** taxpayers, it's just a shell game. Lose exemptions, increase CTC or gain family tax credit.

Can you still claim an exemption for a disabled adult residing in your home?

 

[WVUCOOPER]

My children that would have been exemptions are over 17 which I believe is the cutoff age. Please correct me if I'm not correct.

Yeah you lose CTC but gain that Family Tax Credit (non refundable) of $500. Depending on income and what bracket that loss of exemptions occurs, I can see some tax payers paying more under 2017 tax brackets. With the new tax brackets, I think ***MOST*** would be mitigated. Again, I don't know your specifics and I hope I'm not coming across as defensive or dismissive.

 

[WVUCOOPER]

Can you still claim an exemption for a disabled adult residing in your home?

Not an exemption, but a Family tax credit. It will make a difference around the edges.

 

[WVUBRU]

Yeah you lose CTC but gain that Family Tax Credit (non refundable) of $500. Depending on income and what bracket that loss of exemptions occurs, I can see some tax payers paying more under 2017 tax brackets. With the new tax brackets, I think ***MOST*** would be mitigated. Again, I don't know your specifics and I hope I'm not coming across as defensive or dismissive.

You are not. Your feedback is very much welcomed ( by me, at least) and I find your expertise on this to be excellent. Dr. Niedermier would be proud.

 

[dave]

Not an exemption, but a Family tax credit. It will make a difference around the edges.

Filing married jointly is about a flat 23-24k deduction now if I am thinking correctly if you dont itemize?

 

[Mntneer]

A week or so ago, we had a thread about the impact of the new tax law on individuals and admittedly, I was in a world of confusion how it was going to impact me. Now, I'm no longer confused. What I feared is indeed true and I'm guessing it will also impact others in a similar manner.

During the past 2o years, my federal effective tax rate has fluctuated from 8.5% to 11%. 2017, it was 9.8%. I estimated withholding where it should have shaken out around 10.9%. My estimated taxes is going to be around 14.3%. That is a pretty significant tax increase and my income from 2017 to 2018 is relatively flat so the only thing that changed is the tax law.

If you are in the upper middle class and married file jointly with more than the average of 1.5 children, expect the same kind of effect.

I've been hovering at around 13% for almost the past 8 years, so I'll be curious to see what where I'll be with the new law, as an upper middle class with 2 kids.

 

[WVUCOOPER]

Filing married jointly is about a flat 23-24k deduction now if I am thinking correctly if you dont itemize?

Right. Quite frankly, most WVians will no longer itemize. State tax deduction on Sch A caps at 10k, which means a married couple would need $14,001 in mort interest and charitable deductions to break that threshold. MFJs that previously itemized and have no kids, will probably see a tax increase to a net nothingburger - depending on income.

 

[WVUBRU]

I've been hovering at around 13% for almost the past 8 years, so I'll be curious to see what where I'll be with the new law, as an upper middle class with 2 kids.

I will qualify my comment similar to coop and say it is hard to know without specifics. But at past percent of 13%, I would be shocked if you will see an increase like mine. There are a lot of moving parts and hopefully you won't be as negatively impacted as I am.

 

[WVUCOOPER]

Dr. Niedermier would be proud.

Ha. Not sure if he was the best teacher I ever had (has to be close), but I certainly liked him more than any other.

 

[WVUCOOPER]

I've been hovering at around 13% for almost the past 8 years, so I'll be curious to see what where I'll be with the new law, as an upper middle class with 2 kids.

You have pass through biz?

 

[WVUBRU]

Ha. Not sure if he was the best teacher I ever had (has to be close), but I certainly liked him more than any other.

He was the most impactful in my undergraduate life by a mile.

 

[countryroads89]

That is a pretty significant tax increase and my income from 2017 to 2018 is relatively flat so the only thing that changed is the tax law.

If you are in the upper middle class expect the same kind of effect.

I don't mean to be an "I told you so" kind of guy but...

I'm not looking forward to doing my taxes this year. I have always had a bunch of itemized deductions.

dave thinks I was just trying to get under his skin with my prior posts about the tax laws negatively affecting the middle class but I was correct.

 

[dave]

Right. Quite frankly, most WVians will no longer itemize. State tax deduction on Sch A caps at 10k, which means a married couple would need $14,001 in mort interest and charitable deductions to break that threshold. MFJs that previously itemized and have no kids, will probably see a tax increase to a net nothingburger - depending on income.

My deduction before was probably 14k including property taxes give or take. Im guessing my taxable income will go down a bit.

 

[dave]

I don't mean to be an "I told you so" kind of guy but...

I'm not looking forward to doing my taxes this year. I have always had a bunch of itemized deductions.

dave thinks I was just trying to get under his skin with my prior posts about the tax laws negatively affecting the middle class but I was correct.

Once again. Read the thread. You were wrong.

 

[WVUCOOPER]

My deduction before was probably 14k including property taxes give or take. Im guessing my taxable income will go down a bit.

Minor point - taxable income will go up, while total tax will be flat to down.

 

[Airport]

My accountant said it was very helpful to me. I know my estimates have decreased. I'm an S corp, with an LLC for my building.

 

[dave]

Minor point - taxable income will go up, while total tax will be flat to down.

I am confused. I will just have to do my taxes and figure it out.

 

[Mntneer]

I will qualify my comment similar to coop and say it is hard to know without specifics. But at past percent of 13%, I would be shocked if you will see an increase like mine. There are a lot of moving parts and hopefully you won't be as negatively impacted as I am.

I went ahead and back early last year doubled the extra withholding I was already doing, at both the state and federal level, so I hope I'm not surprised too much when I file.

You have pass through biz?

No, we're a C Corp.

 

[Original Mountaineer1]

Ha. Not sure if he was the best teacher I ever had (has to be close), but I certainly liked him more than any other.

I never had him. I wish I had. I seem to end up with the odd assortment of temp profs for my accounting class. Manning for advanced. Dyer for one of the intermediates.

 

[WVUCOOPER]

No, we're a C Corp.

JK. Don't see much of those these days.

 

[WVUBRU]

I never had him. I wish I had. I seem to end up with the odd assortment of temp profs for my accounting class. Manning for advanced. Dyer for one of the intermediates.

I was unaware you also was an accounting major.

 

[dave]

I was unaware you also was an accounting major.

He is so old it wasnt called accounting when he went to school.

 

[Mntneer]

JK. Don't see much of those these days.

Long story short. Company started as a C Corp with my Grandfather, and it stayed that way ever since. In some ways it makes more sense for us, especially now.

 

[WVUCOOPER]

I think A LOT of people are not going to be happy when they file their taxes this year:

IRS waives penalty for many whose tax withholding and estimated tax payments fell short in 2018

WASHINGTON — The Internal Revenue Service announced today that it is waiving the estimated tax penalty for many taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year.

The IRS is generally waiving the penalty for any taxpayer who paid at least 85 percent of their total tax liability during the year through federal income tax withholding, quarterly estimated tax payments or a combination of the two. The usual percentage threshold is 90 percent to avoid a penalty.

The waiver computation announced today will be integrated into commercially-available tax software and reflected in the forthcoming revision of Form 2210 and instructions.

This relief is designed to help taxpayers who were unable to properly adjust their withholding and estimated tax payments to reflect an array of changes under the Tax Cuts and Jobs Act (TCJA), the far-reaching tax reform law enacted in December 2017.

“We realize there were many changes that affected people last year, and this penalty waiver will help taxpayers who inadvertently didn’t have enough tax withheld,” said IRS Commissioner Chuck Rettig. “We urge people to check their withholding again this year to make sure they are having the right amount of tax withheld for 2019.”

The updated federal tax withholding tables, released in early 2018, largely reflected the lower tax rates and the increased standard deduction brought about by the new law. This generally meant taxpayers had less tax withheld in 2018 and saw more in their paychecks.

However, the withholding tables couldn’t fully factor in other changes, such as the suspension of dependency exemptions and reduced itemized deductions. As a result, some taxpayers could have paid too little tax during the year, if they did not submit a properly-revised W-4 withholding form to their employer or increase their estimated tax payments. The IRS and partner groups conducted an extensive outreach and education campaign throughout 2018 to encourage taxpayers to do a “Paycheck Checkup” to avoid a situation where they had too much or too little tax withheld when they file their tax returns.

Although most 2018 tax filers are still expected to get refunds, some taxpayers will unexpectedly owe additional tax when they file their returns.

 

[WVUBRU]

I think A LOT of people are not going to be happy when they file their taxes this year:

IRS waives penalty for many whose tax withholding and estimated tax payments fell short in 2018

WASHINGTON — The Internal Revenue Service announced today that it is waiving the estimated tax penalty for many taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year.

The IRS is generally waiving the penalty for any taxpayer who paid at least 85 percent of their total tax liability during the year through federal income tax withholding, quarterly estimated tax payments or a combination of the two. The usual percentage threshold is 90 percent to avoid a penalty.

The waiver computation announced today will be integrated into commercially-available tax software and reflected in the forthcoming revision of Form 2210 and instructions.

This relief is designed to help taxpayers who were unable to properly adjust their withholding and estimated tax payments to reflect an array of changes under the Tax Cuts and Jobs Act (TCJA), the far-reaching tax reform law enacted in December 2017.

“We realize there were many changes that affected people last year, and this penalty waiver will help taxpayers who inadvertently didn’t have enough tax withheld,” said IRS Commissioner Chuck Rettig. “We urge people to check their withholding again this year to make sure they are having the right amount of tax withheld for 2019.”

The updated federal tax withholding tables, released in early 2018, largely reflected the lower tax rates and the increased standard deduction brought about by the new law. This generally meant taxpayers had less tax withheld in 2018 and saw more in their paychecks.

However, the withholding tables couldn’t fully factor in other changes, such as the suspension of dependency exemptions and reduced itemized deductions. As a result, some taxpayers could have paid too little tax during the year, if they did not submit a properly-revised W-4 withholding form to their employer or increase their estimated tax payments. The IRS and partner groups conducted an extensive outreach and education campaign throughout 2018 to encourage taxpayers to do a “Paycheck Checkup” to avoid a situation where they had too much or too little tax withheld when they file their tax returns.

Although most 2018 tax filers are still expected to get refunds, some taxpayers will unexpectedly owe additional tax when they file their returns.

I'm not happy I'm going to pay thousands of more in taxes after the bullshit political fight but I will. But this news pleases me even though it is hard to be pleased over the news in a macro sense.

 

[Airport]

I think A LOT of people are not going to be happy when they file their taxes this year:

IRS waives penalty for many whose tax withholding and estimated tax payments fell short in 2018

WASHINGTON — The Internal Revenue Service announced today that it is waiving the estimated tax penalty for many taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year.

The IRS is generally waiving the penalty for any taxpayer who paid at least 85 percent of their total tax liability during the year through federal income tax withholding, quarterly estimated tax payments or a combination of the two. The usual percentage threshold is 90 percent to avoid a penalty.

The waiver computation announced today will be integrated into commercially-available tax software and reflected in the forthcoming revision of Form 2210 and instructions.

This relief is designed to help taxpayers who were unable to properly adjust their withholding and estimated tax payments to reflect an array of changes under the Tax Cuts and Jobs Act (TCJA), the far-reaching tax reform law enacted in December 2017.

“We realize there were many changes that affected people last year, and this penalty waiver will help taxpayers who inadvertently didn’t have enough tax withheld,” said IRS Commissioner Chuck Rettig. “We urge people to check their withholding again this year to make sure they are having the right amount of tax withheld for 2019.”

The updated federal tax withholding tables, released in early 2018, largely reflected the lower tax rates and the increased standard deduction brought about by the new law. This generally meant taxpayers had less tax withheld in 2018 and saw more in their paychecks.

However, the withholding tables couldn’t fully factor in other changes, such as the suspension of dependency exemptions and reduced itemized deductions. As a result, some taxpayers could have paid too little tax during the year, if they did not submit a properly-revised W-4 withholding form to their employer or increase their estimated tax payments. The IRS and partner groups conducted an extensive outreach and education campaign throughout 2018 to encourage taxpayers to do a “Paycheck Checkup” to avoid a situation where they had too much or too little tax withheld when they file their tax returns.

Although most 2018 tax filers are still expected to get refunds, some taxpayers will unexpectedly owe additional tax when they file their returns.

Wonder how much of that are states that tax their constituents heavily in real estate and other items that are no longer deductible on the federal return? Wonder if low tax states have it better?

 

[WVUCOOPER]

Wonder how much of that are states that tax their constituents heavily in real estate and other items that are no longer deductible on the federal return? Wonder if low tax states have it better?

I don't think you read the article. Tax tables were wrong until September. Has zero to do with states.

 

[WVUCOOPER]

I'm not happy I'm going to pay thousands of more in taxes after the bullshit political fight but I will. But this news pleases me even though it is hard to be pleased over the news in a macro sense.

Add this to the shutdown and trade news, I don't think the economy is going to be roaring for the first half of 2019. Hopefully it doesn't wipe out the entire year.

 

[Airport]

Add this to the shutdown and trade news, I don't think the economy is going to be roaring for the first half of 2019. Hopefully it doesn't wipe out the entire year.

The one thing we've heard is how much the high tax states cost a person to live there and that those taxes were not going to be deductible. I'm not sure how a tax table could even account for that. I always have to pay estimates, so I never even think about it.

 

[WVUCOOPER]

The one thing we've heard is how much the high tax states cost a person to live there and that those taxes were not going to be deductible. I'm not sure how a tax table could even account for that. I always have to pay estimates, so I never even think about it.

OK? We get it, you don't like states where people pay tax. Luckily you don't live there. I don't see your point. Quite frankly, W2 taxpayers with kids are the ones this relief is aimed at.

 

[WVUBRU]

The one thing we've heard is how much the high tax states cost a person to live there and that those taxes were not going to be deductible. I'm not sure how a tax table could even account for that. I always have to pay estimates, so I never even think about it.

It is not my intention to make this thread or my comments political. But fact remains, this legislation is horrible as it pertains to individuals. The corporate side of it, I'm not as educated on and won't comment.

 

[WVU82]

IRS Releases New 2018 Withholding Tables To Reflect Tax Law ...
Jan 11, 2018 · The Internal Revenue Service (IRS) has updated the income-tax withholding tables for 2018 to reflect changes made by the new tax law. The updated tables reflect the new rates for employers to use ...

Tax Reform | Internal Revenue Service
IRS is offering a series of webinars on the new tax law. Visit Webinars for Tax Practitioners for upcoming web conferences. Page Last Reviewed or Updated: 06-Nov-2018

New tax brackets and rates for 2018 - CNNMoney
New tax brackets and rates for 2018 By Jeanne Sahadi and Tal Yellin Thanks to an overhaul of the federal tax code, there are new income tax brackets and rates for 2018.

 

[countryroads89]

It is not my intention to make this thread or my comments political. But fact remains, this legislation is horrible as it pertains to individuals. The corporate side of it, I'm not as educated on and won't comment.

If you are of the mindset, big tax breaks for corporations and the wealthy are good and screw the others, you love this tax law. If you are of the mindset that the con man sitting in the WH gave you (in the middle class) a big tax break too, like some of the right wingers on this forum, you will be surprised.