2018 Tax Return

[Ariana33]

Can women respond to this question? I'm sure you aren't trying to limit the responses, but what's up with your reference?

I'm from NY and say "you guys" referring to both men and women, I think it's a northeastern thing. Sort of like how people say "ya'll". Anyway, to anwer the question, I am getting a refund this year! I plan to use the extra surplus towards my gold investment

[Singuy]

You can still itemize if it makes sense because your deductions exceed the new higher standard deduction, so you haven't necessarily lost anything. The big losers are the folks who can no longer fully deduct property and state taxes because they capped them at 10K. I know plenty of people who pay a lot more than that in property taxes alone. It's quite common actually here in NJ.

Not saying you can't itemize. I am referring to the lost of personal exemption that makes those who qualifies to itemize pay way more taxes this year vs last year as Kor13 pointed out.

2017, Personal exemption + standard deduction is 10400 per person or 20800 for a couple for those who doesn't want to itemize.
Which means that if you have a property tax of 4k, interest of 15k, and donation of 10k, that's 29k worth of deductions. So in 2017, you can itemize and take the 29k + 8k of personal exemption for a couple(and 4k additional for every child).

in 2018, your standard deduction is 24k with no personal exemption which means the person can still itemize to 29k but lost the 8k + 4k for every additional child/dependent. This is how Kor13 lost a boadload of deduction even with itemizing. So the new tax law really screws people with 300k+ houses and a household income of 100k/year with a bunch of kids/dependents. It benefits those with no house, no dependents, no state taxes, and no donations.

So I don't know why they are pushing for that while giving someone with paid off houses or renters(no interest), high income (marriage penalty gone plus lower percentage and + child deductions) the benefits. I feel like it's a great political way to advertise "I have doubled your standard dedications" but secretly having middle class Americans pay more in taxes since no one really understand taxes anyway. Trump didn't double your deductions...he doubled your standard deductions. He only increased your total deductions by 15% for those with no houses/donations/state taxes...while decreasing ACTUAL total deductions by tens of thousands for the rest.

[~bs]

I asked a friend (phoned a friend haha) about the education thing.

It appears the $1000 credit is permanent, what's up in the air is the deduction, which was for people with incomes over $65ksingle/130kjoint in 2018, The deduction is up to $4000 of income, so if you get taxed at 25%, that's $1000 in tax benefit that hasn't been extended yet. Those income limits really aren't that high, so id imagine it might affect up to half of the people sending their kids to college.

[Like2Plan]

I’m trying to track, but isn’t the child tax credit a one for one reduction off your tax bill vs the previous exemption a reduction off your gross income?

[~bs]

I'm not really the person to ask, but I think the new format for the child credit is etiher $1000 or $500, depending on if they're younger than 18. And yes a credit is a direct dollar for dollar reduction of tax.

Previously, you could claim $3300ish in exemption, which reduced taxable income. so the tax benefit really depends on your tax bracket.

[Singuy]

I’m trying to track, but isn’t the child tax credit a one for one reduction off your tax bill vs the previous exemption a reduction off your gross income?

For 2017, the child tax credit is 1000 dollars(pure money you get off your total tax bill) PLUS 4k in personal exemption (which means if you are in the 25% tax bracket, that's another 1k off your tax bill). Phase out for the 1000 dollar PURE MONEY begins at 113k as a joint filer and ends at 130ish k..I don't remember. Personal exemption has a phase out too but it's much much higher.


For 2018, the child tax credit is 2000 dollars of PURE money with no personal exemption. Phase out begins at 400k as a joint filer so basically almost everyone gets the 2k of pure money.

So essentially, people who makes say 100k/year sees zero difference in their tax bill when it comes to child credits. People who makes 130k+ sees between 440-1000 dollar less taxes in their tax bill depending on how much they make. People who makes less than 100k sees a small difference (like between 100-200 dollars).

[kork13]

So essentially, people who makes say 100k/year sees zero difference in their tax bill when it comes to child credits. People who makes 130k+ sees between 440-1000 dollar less taxes in their tax bill depending on how much they make. People who makes less than 100k sees a small difference (like between 100-200 dollars).

That's what I found as well -- last year, we only got ~$250/kid of the tax credit due to the phase-out. This year, we do get the full $2k/kid. So as I said in the first place, it rounds out to being approximately neutral for my family, but it really grinds at me the way it's being advertised as a "tax cut for all!" ... it's really not...

[Singuy]

That's what I found as well -- last year, we only got ~$250/kid of the tax credit due to the phase-out. This year, we do get the full $2k/kid. So as I said in the first place, it rounds out to being approximately neutral for my family, but it really grinds at me the way it's being advertised as a "tax cut for all!" ... it's really not...

When I saw the bill, I knew exactly who was going to get screwed, and it's most likely middle class Americans..lol. The news were trying to hammer it home but of course everyone keep saying fake news. No, the lose of personal exemption is a pretty big deal for those with sizable interest/state tax/donations/property tax. And that accounts for pretty much everyone seeking the "American dream". It's almost a tax on the "American dream". Good thing people has no idea how taxes work so they will keep buying houses thinking it's "good for taxes". It was barely the case before and now it's not even a true statement.

Then I went and looked at everything else and things really jumped out at me that just completely decreased our 300k taxable income by 50% vs 2017. It was like a shower of tax savings. Child tax credit, lower tax bracket, no marriage tax penalty, and 20% deduction on our small business. Yup..totally need that tax cut to fund our million dollar portfolio.... And we are totally going to hire more people because we love paying people to play on their phone due to no additional work being added...

I really don't understand why this administration and the republicans shower people like our household with all this tax benefit. Because we create jobs? Mr. President, jobs are created from work demand while wages are determined by market price, not more money in our pockets....Which person in congress hired people solely because they have more money in their pockets? Do they think we all want an entourage? Basically putting people on the payroll just because we want to roll like ballers? Got to say, the way athletes spend their money is the ONLY place I've seen trickle down economics worked..lol.

[disneysteve]

I really don't understand why this administration and the republicans shower people like our household with all this tax benefit.

Because it benefits the people making the rules. They do whatever is in their own best interest.

[Singuy]

Because it benefits the people making the rules. They do whatever is in their own best interest.

I get that but the question is still why? Being that greedy has no point unless the goal in life is to snort cocaine off super models in a Ferrari. The diminishing in return in happiness from materialistic things that are beyond a certain point is real. We are experiencing this right now. We look at houses 3x more expensive than ours and just find them..meh. We spent 160 on a meal yesterday for the first time and thought meals 1/3 of that price tastes better. After you pay off your house, your kid's college tuition, your cars, and all your debt..there's really nothing to look forward to. We find ourselves buying random crap because of boredom. Our portfolio is just a number I look at and gaining 30k or losing 30k in a given day doesn't even phase me anymore.

If you want to be a decent responsible adult trying to raise a family, giving our family another 30k in tax savings really doesn't do anything for us. Now lets imagine those who makes 1-10 mil a year. Their reduction is probably 300-500k. Are they really happier with an extra 500k when their house are paid off with nothing to worry about?

[disneysteve]

I get that but the question is still why? Being that greedy has no point unless the goal in life is to snort cocaine off super models in a Ferrari. The diminishing in return in happiness from materialistic things that are beyond a certain point is real. We are experiencing this right now. We look at houses 3x more expensive than ours and just find them..meh. We spent 160 on a meal yesterday for the first time and thought meals 1/3 of that price tastes better. After you pay off your house, your kid's college tuition, your cars, and all your debt..there's really nothing to look forward to. We find ourselves buying random crap because of boredom. Our portfolio is just a number I look at and gaining 30k or losing 30k in a given day doesn't even phase me anymore.

If you want to be a decent responsible adult trying to raise a family, giving our family another 30k in tax savings really doesn't do anything for us. Now lets imagine those who makes 1-10 mil a year. Their reduction is probably 300-500k. Are they really happier with an extra 500k when their house are paid off with nothing to worry about?

Ah. I understand your question now. I think the answer varies somewhat from person to person. We're not in that wealthy demographic so I can't speak from personal experience, but over the past couple of years we have seen my income rise by about 90K. I can't deny that I'm much happier and more relaxed today than I was 2-3 years ago. I used to worry a lot more about money and the future and I just don't anymore. We still don't have enough for me to just pack it in and retire, so if I could up the income even more, that would be even better, but I'm at a point now where I'm comfortable and satisfied with the money I've got.

If you have nothing to look forward to, I think that's a personal issue. You need to find your passion. What do you enjoy doing? Is it travel? Is it collecting something? Maybe it's helping others, volunteering your time and/or financially supporting causes that you feel strongly about. I know there is at least one charity that we would love to give more to than we do currently. If my income grew significantly, we would definitely support them to a greater extent.

All of that said, I totally agree that a tax break for the middle class would create a lot more happiness than the tax break for the rich that actually occurred. With any luck, the next administration will dial it back and do something to give the savings to the folks who would really benefit from it the most.

[Singuy]

If you have nothing to look forward to, I think that's a personal issue. You need to find your passion. What do you enjoy doing? Is it travel? Is it collecting something? Maybe it's helping others, volunteering your time and/or financially supporting causes that you feel strongly about. I know there is at least one charity that we would love to give more to than we do currently. If my income grew significantly, we would definitely support them to a greater extent.

When I mean nothing to look forward to, I specifically mean nothing to look forward to in regards to the usage of money. There have been lifetime objectives that you generally grind at work for, such as house debt, kid's tuition, or student loan debt. Once you are in FI, the value of money drops significantly. I suspect people who are in higher income brackets have the "value" of money dropping significantly.

There are plenty for us to look forward to that's not money related. Our kids are not even in VPK so plenty of fun times to see them grow.

[disneysteve]

When I mean nothing to look forward to, I specifically mean nothing to look forward to in regards to the usage of money.

In a way, that's a good thing. It means you're stable and satisfied with what you've got. On the other hand, I also think it's important to have things to look forward to. For us, that typically involves travel plans. We're going to Atlantic City in April for a conference. We're going to Dallas in June. We're going to Disney World in August. We haven't planned anything for the fall yet but we will. That's where we like to spend our money.

But I realize that I'm not in the wealthy category that you're talking about. When you're talking about millions of dollars, at some point it has to become somewhat meaningless to have that much money. I often think that when I see stories about some CEO getting a new contract for $10 million/year. Other than giving a ton to charity, what does one really do with that much money? Once you have everything, what more is there?

[veronak]

I’m waiting to see. I started and looks like things were cut in half

[prosper]

This thread has been very educational