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anyone else compare their 2018 federal taxes to old system?

Home Tax Reduction anyone else compare their 2018 federal taxes to old system?

  • Avatar JBME 
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    Joined: 03/26/2018

    finished federal taxes last night and then bothered to waste time this morning to see what this year would have been if we were still under the old system (making a few adjustment for inflation in things like personal exemptions). I’m in a high income tax state and property taxes are over $10k so that suggests we would have been worse off under the new system. We’ve fell in the 28% old bracket before. Going for me is that we’ve had to pay the dreaded AMT in the past and also we had a third child this year.

    This year we fell into the 24% bracket…income went up enough that we actually would have for the first time ended up in the 33% old system bracket. My deductions this year under the old system would have totaled around $57k, but with the limits on property and state income tax deductions, it was only $34k this year since we still pay a lot of mortgage interest. So we’ll continue to not take the standard deduction. We paid $0 in AMT this year and instead of a $325 tax credit, we got a $6325 tax credit thanks to kids and not having too much of a high income. Our total tax before credits would have been $1700 more under this system compared to the old system, but in the end we pay $3500 less in taxes under this new system thanks to those child tax credits. Bottom line is my taxes were cut even though I live in one of those high tax states.

    Also, we found we owe the government $189. *happy dance* I hate giving them an interest-free loan but also don’t want to owe a huge bill at tax time. I don’t think we could have come much closer to hitting the bullseye!

    #188935 Reply
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 3325
    Joined: 01/08/2016

    Perfect.
    Yes many of us high earners owe less.
    I was also shooting to owe about 100. Still waiting to see how close I got.

    #188938 Reply
    Liked by JBME
    CordMcNally CordMcNally 
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    Status: Physician
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    Joined: 01/03/2017

    There have been lots of reports of people incredibly upset that they owe this year instead of getting a refund despite a majority actually have a lower total tax bill. Apparently they don’t understand withholding and apparently the general public love getting refunds and hate owing at the end of the year regardless of what the actual tax bill ends up being. It would be funny if it wasn’t sad.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    Avatar hightower 
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    Status: Physician
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    Joined: 12/07/2016

    First glance at my numbers this year looks like I paid slightly less in taxes overall despite making about the same amount of income.  I should get a refund of a couple hundred bucks from federal and around 1300 from state, which is about the same as prior years.

    I believe I would have owed a little if it weren’t for the child tax credit that I now qualify for.

    #189014 Reply
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 3325
    Joined: 01/08/2016

    There have been lots of reports of people incredibly upset that they owe this year instead of getting a refund despite a majority actually have a lower total tax bill. Apparently they don’t understand withholding and apparently the general public love getting refunds and hate owing at the end of the year regardless of what the actual tax bill ends up being. It would be funny if it wasn’t sad.

    Click to expand…

    so many ppl are bad at math.

    #189464 Reply
    Avatar ko 
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    Status: Other Professional
    Posts: 64
    Joined: 02/03/2016

    Same here. I’m in one of those high tax states. We paid about $17k less in federal tax this year compared to what we would have paid under the old system (would have been in the 33% bracket under the old system).

    #189523 Reply
    Zaphod Zaphod 
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    Status: Physician, Small Business Owner
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    Joined: 01/12/2016
    Earnest refinancing bonus

    Its still funny.

    #189524 Reply
    Avatar BCBiker 
    Participant
    Status: Physician
    Posts: 171
    Joined: 01/10/2016
    My savings vs. old system is fairly significant with pass through deduction on side gig income. Also have fairly insignificant mortgage interest and relatively low local taxes.

    There have been lots of reports of people incredibly upset that they owe this year instead of getting a refund despite a majority actually have a lower total tax bill. Apparently they don’t understand withholding and apparently the general public love getting refunds and hate owing at the end of the year regardless of what the actual tax bill ends up being. It would be funny if it wasn’t sad.

    Click to expand…

    so many ppl are bad at math.

    Click to expand…

    Basically everyone equates paying taxes with their tax refund, which I find hilarious whenever I talk to people about taxes.

    This largely reflects that people don’t think more than 2 weeks ahead for their finances. Similar to not caring how much the car costs, only the payment.

    This suggests that we could fix the deficit with broad support if taxes were both increased and employers were required to withhold 20% more than required.

    Pre reform:

    $100K income, $11K taxed, $13K withheld, $2K returned

    Post reform:

    $100K income, $18K taxed, $22K withheld, $4K returned -> happy camper

    Suggesting people do their own taxes so they know their head from a turnip has proved to be futile. I have received offers for as high as $1000 to do doc colleagues’ taxes. It might be worth it…

    #189526 Reply
    Avatar BCBiker 
    Participant
    Status: Physician
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    Joined: 01/10/2016

    These tweets make me cringe: https://www.huffingtonpost.com/entry/tax-refunds-down-84-percent-twitter-complaints_us_5c5e4576e4b0eec79b2379e4

    Very unlikely these people are paying more total tax. As much as I am ok with negative press for POTUS, getting political backlash purely because the people that are mad do not understand the very basics of how taxes work is unfair.

    #189600 Reply
    Avatar justlearning 
    Participant
    Status: Other Professional, Spouse
    Posts: 112
    Joined: 08/15/2017

    a lot of low income families relies on tax refund each year and they would like to get something back regardless of their W4 adjustments. It is a forced saving for them in a way and it just feels nice getting a sum of money.

    #189622 Reply
    Avatar docnews 
    Participant
    Status: Physician
    Posts: 371
    Joined: 01/09/2016

    Didn’t compare to old system with 2018 numbers but…

    Gross income up 17% from 2017 (tons of overtime, expect decrease this year), yet all federal taxes including FICA 16% of gross this year when it was 19% for ’17. In other words, tax dollar amount almost exactly the same despite making 17% more. Crazy. Expect to pay double after 2025 when this new bill expires!

    I use gross because net is confusing since FICA is partially deducted as a self employed business.

    I have no income state taxes, low property taxes but 9% sales tax on what *little* I buy. Benefiting big from the new pass thru qbi deduction. Plus 2 children = 4k off taxes.

    #189629 Reply
    wonka31 wonka31 
    Participant
    Status: Physician
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    Joined: 03/24/2018

    My CPA did it this year and assumed the same income (income was close to last year) and I was on track to pay about 11k less. I haven’t recalculated it since then.

    #189632 Reply
    Avatar snowcanyon 
    Participant
    Status: Physician
    Posts: 330
    Joined: 10/22/2018

    Yes, in flyover in a moderate tax state. Total tax bill about 2k more.

    #189786 Reply
    Hank Hank 
    Moderator
    Status: Attorney
    Posts: 1145
    Joined: 03/27/2017

    There would be a lot more interest in cutting fat out of federal expentitures if people had to cut a check for the full amount of their tax liability on April 15th.  As things stand now, it’s like boiling a frog.

    #190265 Reply
    Avatar Marko-ER 
    Participant
    Status: Resident, Small Business Owner
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    Joined: 03/09/2016

    Oh, and in case someone wants to do side-by-side comparison of brackets from before & after TCJA:

     

    https://www.kdpllp.com/2017-vs-2018-federal-income-tax-brackets/

     

    Had trouble finding a clean/clear comparison with google.

    #190271 Reply

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