2018 Tax Return

[disneysteve]

Figured I should bump up this thread. More of us have probably done our taxes by now so may have numbers to share.

As expected, the Trump tax hike impacted us. For the first time in many years, we owe for our Federal return. It's modest at $453 but we've always gotten a refund so that's a change. The good news is that we are getting a state refund of $2,458 so our net will be $2,095 back. I'm happy with that as I was expecting it to be even worse.

[corn18]

Figured I should bump up this thread. More of us have probably done our taxes by now so may have numbers to share.

As expected, the Trump tax hike impacted us. For the first time in many years, we owe for our Federal return. It's modest at $453 but we've always gotten a refund so that's a change. The good news is that we are getting a state refund of $2,458 so our net will be $2,095 back. I'm happy with that as I was expecting it to be even worse.

The real question is what would you have paid if there were not tax cuts? A lot of people under withheld when the new withholding tables came out. Doesn't mean they paid more taxes.

[disneysteve]

The real question is what would you have paid if there were not tax cuts? A lot of people under withheld when the new withholding tables came out. Doesn't mean they paid more taxes.

I really don't know. I guess I'd need to sit down and calculate what our tax liability would have been under the 2017 rates which I'm not about to do. I'd also have to go through the whole process of figuring out all of the itemized deductions that we weren't able to take. I will say that I enjoyed the simplicity of filing for 2018, not needing to compile everything for those itemized deductions since we couldn't deduct them anymore. That was way simpler.

[Thrif-t]

disneysteve did you adjust your withholdings for 2018??

[disneysteve]

disneysteve did you adjust your withholdings for 2018??

I sent my accountant several paystubs partway into the year once the new tables were in use and he said my withholding was okay.

[corn18]

Hard to draw a conclusion without any data to support it.

[kork13]

For a variety of reasons, I ended up mostly finishing my taxes, but never filing... I finally actually did my final review & filed our taxes tonight. Final tally: we owed $976. Our total tax was $2500 more in 2018 than 2017, and our AGI was $28k more in 2018 than 2017 (though some of that increase was lower-taxed LTCG). Effective tax rate went up very slightly, from 7.86% in 2017 to 7.98% in 2018. So as I expected, we ended up more or less neutral with the tax law changes. ::shrug::

What did surprise me, though, was how close we came to owing underpayment penalties. 3 general measures for keeping yourself safe from underpayment penalties: (1) owe less than $1,000 in tax after subtracting their withholdings and credits, or (2) If they paid at least 90% of the tax for the current year, or (3) 100% of the tax shown on the return for the prior year, whichever is smaller. Our withholdings brought us just $24 dollars shy of #1, $347 above #2, and $1,394 above #3. PHEW!!! In 2017, we got a $2450 refund, largely because our second tax deduction--I mean son--was born. So to mitigate that, I bumped up our withholding by 2 exemptions, expecting that to bring us back down around a $400-ish refund (my general target is <$500 refund). I guess I should have paid more attention when the new withholding tables came out...

And now, looking ahead to 2019 taxes, I have no idea what I should do... Our taxable income will drop nearly in half (my wife is getting medically retired next month), and she'll be going back to school, so those expenses will make education tax credits available to us. Short of running a series of projections based on our way-lower income & updating withholdings throughout the year, I feel like we're gonna WAAAY over-shoot 2019 taxes with my withholding.

[corn18]

As a note, the IRS lowered the safe harbor rule (#2 above) to 85% for 2018 because of the under withholding issues.

[Like2Plan]

Figured I should bump up this thread. More of us have probably done our taxes by now so may have numbers to share.

As expected, the Trump tax hike impacted us. For the first time in many years, we owe for our Federal return. It's modest at $453 but we've always gotten a refund so that's a change. The good news is that we are getting a state refund of $2,458 so our net will be $2,095 back. I'm happy with that as I was expecting it to be even worse.

The real question is what would you have paid if there were not tax cuts? A lot of people under withheld when the new withholding tables came out. Doesn't mean they paid more taxes.

It is difficult to tell going by the refund amount as corn has noted. Some folks have been posting effective tax rate, but that might not be a good measure without knowing if the AGI stayed the same one year over the next. The only way you will know for sure is to apply this year's data to the previous year's tax rules.

[disneysteve]

The only way you will know for sure is to apply this year's data to the previous year's tax rules.

Exactly. Our system is so complex that it is nearly impossible to know if you made out better or worse in 2018 than you would have in 2017 because there are so many variables. You would literally have to sit down and process your 2018 return as if you were doing it with the 2017 system. I suppose if you have last year's tax software, that wouldn't be terribly difficult but I don't.

[corn18]

This calculator gets you in the ball park.

[disneysteve]

Nice corn. Once I have my return I may give that a try.

[Like2Plan]

I finally got around to filing our taxes. We paid more in taxes in 2018 than we did in 2017. We lost some deductions (we could only use the std deduction), but the main reason for the increase was our AGI was higher in 2018 due to some planned tIRA to Roth conversions. On the up side, our effective tax rate went down a couple of percentage points from 2017 to 2018. We had adjusted our withholding at the beginning of last year because I didn't want to have to do estimated taxes for the conversions, so we did not owe more $$ for federal.
.
The blind spot was state taxes. We also adjusted withholding for state, but fell short by about $400. In VA, if you owe more than $150 you have to do quarterly estimated taxes for the following tax year (in addition to the regular withholding). So, the joke is on me--apparently, I will have to do estimated taxes for state.

[disneysteve]

Our taxes were about $5,000 higher for 2018. That was partly due to higher income but largely due to the new tax laws and loss of deductions. As I said all along, the tax "cut" wasn't a cut for everyone. It was an increase for a lot of people, especially residents of high tax states like CA, NY, and NJ.

[Singuy]

We just did our taxes. Our total revenue for the year was similar to last year (about 400k), but our expenses went up by 70k from the business end.

So all in all, our taxes decreased a boatload. Our total income tax was 74875 in 2017 vs 34088 in 2018, which is a difference of -44304

The 70k worth of extra expense is worth about 21,700@ 31% if this was 2017 so

44,304-21700 = $22,604 is how much we saved on our taxes 2018 vs 2017. Anyways, I completely screwed up our withholdings and ended up with a 28k tax return for the year.