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New Tax Law Impact

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We got about the same amount back as we usually do, but I adjusted our with holdings in February of 2018 when the notice was put out about the surprise that may await most people at the end of the year. We're very low income, so I didn't want to get in trouble for the extra $20 every two weeks we got. I don't trust Politicians, especially rich politicians to look out for me, and I know anything they 'give' back to me, they'll want back, plus more (interest, fees, fines, etc) 

But then this goes back to the point up above, why do we prefer a lump sum back versus breaking even? Well --- we do live paycheck to paycheck for now. While my husband picks up overtime everywhere he can find it -- as well as additional training that he travels for to make his skills worth more, this is how we live. Even owing $300-$500 would easily devastate us. If we had owed this year, along with my power steering pump going out and my husband needing a crown, I don't know what we'd do. And I imagine for many of us low on the totem pole of finances, it's our reality. I hate to think of what some of my peers may be going through if they end up owing .... 

The only thing that's irritating this year is that just a couple days ago, especially with the Government shutting on and off, we got a 'missing' form that we hadn't expected. (Local government claims they credited us $14 that we need to claim as income, but then said in the same form that they never sent us the check and sent it to another city, yet we still owe taxes on it) and the amending form is still not available. I've never been so nervous about the IRS busting down our door. 😂 

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On 2/13/2019 at 12:34 AM, Frances said:

As long as you’re ok with the new record federal deficit, it’s all good.

Honestly I would be fine with not getting any tax credits-even though it would be harder on us...if they also quit funding the vast majority of special interest groups, excess money to all federal programs outside of military/education/and health insurance for kids.  But the last several presidents haven't had a stable budget-always spending more to keep their personal base happy...

This will destroy this country, just like any home that builds debt to the point of not even affording the interest payments-which as a nation looks like we are headed.

I would love to see ALL unnecessary funding stopped and let people write in on their tax forms where they would like to donate money towards...everyones own political focuses can be funded by the people who truly support the idea...allowing the government to focus on education, securing a strong military, and helping the poor children.  

 

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We got double what we got back last year with no change in income from last year so it definitely was a pleasant surprise. 

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From 2017 to 2018...

Our income increased by 6%
Our taxable income increased by 29%
Our total taxes owed decreased by 42%
Our refund increased by 38% (we did not make any changes to withholdings)
Our effective tax rate went from 4.89% to 2.66%

Frankly, the whole thing makes me uncomfortable.  The lower tax bill is nice and all, but we didn't cost society any less last year than the year before.  We drove on the roads and used the libraries and enjoyed the parks more than over.  Our 2017 tax bill felt reasonable and fair.  Having that bill suddenly reduced by 42% feels...unfair?...too good to be true?...like those costs are being passed on to others who are perhaps less able to handle them than we are?  This tax bill come in just a bit higher than what we spent on eating out last year...and we don't eat out that often.  That feels intrinsically wrong to me.

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14 hours ago, nixpix5 said:

We got double what we got back last year with no change in income from last year so it definitely was a pleasant surprise. 

 

Wow

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Funny this came up.  My 26 yr old dd called me in tears and having a panic attack this morning.  She owes taxes for the first time ever.  Her income did not go up significantly, but her expenses did as she's no longer sharing an apt with her brother.  As I'm typing,  dh and she are walking through the filing together (via phone) trying to make some progress.   One filing said she owed $350... with her papa it looks like it's a bit less than $200.  It's still quite a blow, as she's living on the edge and is a student.    Last year she got back over $1000.  She was planning to use money she thought she'd get back for next semester.    

Edited by PrincessMommy

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13 minutes ago, wendyroo said:

From 2017 to 2018...

Our income increased by 6%
Our taxable income increased by 29%
Our total taxes owed decreased by 42%
Our refund increased by 38% (we did not make any changes to withholdings)
Our effective tax rate went from 4.89% to 2.66%

Frankly, the whole thing makes me uncomfortable.  The lower tax bill is nice and all, but we didn't cost society any less last year than the year before.  We drove on the roads and used the libraries and enjoyed the parks more than over.  Our 2017 tax bill felt reasonable and fair.  Having that bill suddenly reduced by 42% feels...unfair?...too good to be true?...like those costs are being passed on to others who are perhaps less able to handle them than we are?  This tax bill come in just a bit higher than what we spent on eating out last year...and we don't eat out that often.  That feels intrinsically wrong to me.

Well, if it makes you feel any better...those things you mentioned specifically are mostly funded by state and local taxes (so aren't going to be reflected in your federal income tax filling). But if your local sales or property taxes did go down, quite often the local services and amenities have some mechanism for donations, like Friends of the Library or some such.

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We did benefit even though we still owe Federal tax and first time we don’t need to pay AMT. The child tax credit did help as we qualify again after many years of being above the cutoff.

Effective tax rate when down from 20.1% to 17.7% while taxable income went up by $49k (ETA: due to stock options and stocks being up at time of vesting)

Edited by Arcadia
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We paid more, by a few thousand dollars. The loss of some deductions is what pushed it up. Fortunately that's not that big of deal for us.

In the news today: the U.S. deficit is up 77% over the same period in 2018. The U.S. has managed to add $310 billion in debt so far this fiscal year. 

But I'm sure the U.S. will avoid the fate of every other empire that's massively overspent and underfunded itself. <eye roll>

Edited by Happy2BaMom

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1 hour ago, Happy2BaMom said:

We paid more, by a few thousand dollars. The loss of some deductions is what pushed it up. Fortunately that's not that big of deal for us.

In the news today: the U.S. deficit is up 77% over the same period in 2018. The U.S. has managed to add $310 billion in debt so far this fiscal year. 

But I'm sure the U.S. will avoid the fate of every other empire that's massively overspent and underfunded itself. <eye roll>

Question - what do you think would have happened with federal spending and the deficit with another party controlling the White House and Congress?  Do you think the deficit would have gone down, or gone up by a lower rate?  What about money in paychecks and pockets?

 

I am always fascinated by the answer given on this question.  The deficit drives me bonkers, but no one ever seems willing, in any majority, to actually make the spending cuts needed to reduce it. Increasing revenue only works until you run out of other people’s money, too, especially when higher tax rates changes economic behavior for individuals and businesses.  

Hubby still hasn’t done our taxes, but he did watch the withholdings like a hawk. That seems to be what has skunked a few people this year who are used to bigger refunds.  

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Hoping to hear from our CPA soon.    I just wanna know.

 

Just heard.  We are getting a lot back.   Much more than normal. 

Edited by mommyoffive

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7 hours ago, Arctic Mama said:

Question - what do you think would have happened with federal spending and the deficit with another party controlling the White House and Congress?  Do you think the deficit would have gone down, or gone up by a lower rate?  What about money in paychecks and pockets?

 

I am always fascinated by the answer given on this question.  The deficit drives me bonkers, but no one ever seems willing, in any majority, to actually make the spending cuts needed to reduce it. Increasing revenue only works until you run out of other people’s money, too, especially when higher tax rates changes economic behavior for individuals and businesses.  

Hubby still hasn’t done our taxes, but he did watch the withholdings like a hawk. That seems to be what has skunked a few people this year who are used to bigger refunds.  

I don’t think the deficit would be increasing due to tax cuts if the other party was in charge. There are two sides to the deficit, revenue and spending. Had we not decreased revenue (virtually every economist whether right, center, or left said the cuts would not pay for themselves), the deficit would not be as high as it is now. And even though most people did see some tax savings, the majority went to the wealthy and corporations, who then used much of it for stock buy backs. And if cuts are now made, they will likely impact lower and average income Americans more, probably more than erasing any savings from tax cuts. I think some leaders were clear that this was the plan. Cut taxes which leads to lower revenue and increased deficits and therefore justification for cutting SS, Medicare, and Medicaid.

And since we’ve had many years of economic growth and it wasn’t showing sign of waning, it didn’t really seem like the time to “stimulate” the economy with tax cuts. Decreasing the deficit while times are good so that spending can be done or cuts can be made when times are bad seems more prudent. While some reform of corporate taxation was likely needed, it still remains to be seen how all of that will play out, as regulations are still being released due to all of the complexity and the speed with which the bill was passed.

To be fair, if the other party was in charge, they probably would have increased spending and increased taxes on some, while possibly lowering taxes for other. How that would have affected the deficit would depend on the interaction among the factors.

It’s the interest on our debt that kills me. So much wasted money.

Edited to add that both sides seem much more concerned about the deficit when they are not in power. 

 

 

Edited by Frances
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On 3/6/2019 at 10:09 AM, Arctic Mama said:

Question - what do you think would have happened with federal spending and the deficit with another party controlling the White House and Congress?  Do you think the deficit would have gone down, or gone up by a lower rate?  What about money in paychecks and pockets?

 

I am always fascinated by the answer given on this question.  The deficit drives me bonkers, but no one ever seems willing, in any majority, to actually make the spending cuts needed to reduce it. Increasing revenue only works until you run out of other people’s money, too, especially when higher tax rates changes economic behavior for individuals and businesses.  

Hubby still hasn’t done our taxes, but he did watch the withholdings like a hawk. That seems to be what has skunked a few people this year who are used to bigger refunds.  

 

I think it's safe to say that there wouldn't have been a tax cut, but other than that I don't know and, TBH, I don't really care. My statement wasn't so much meant to be partisan as it was/is an observation of historical fact. The U.S. has now cut tax revenue and increased spending, and as such, is projected to be running annual deficits of ONE TRILLION+ dollars every year going forward. Most people in this country do not seem bothered by this. I guess everyone is just assuming that we will escape the fate of every other civilization that has done the same thing?

According to the Congressional Budget Office...."interest payments will rise from $325 billion last year to $928 billion by 2029, a nearly threefold increase. If tax cuts and spending increases are extended, interest will exceed $1 trillion and set a new record as a share of the economy....The federal government will spend more on interest than on Medicaid or children by 2020. By 2024, interest will match defense spending.... interest is on course to be the single largest government program within three decades ".

I am concerned about future generations, and about the consequences they will experience as a result of our decisions. I am truly concerned about THEIR paychecks and pockets. Most people are obsessed only about their own. Even if they say they are concerned (about the future generations), ignoring or being OK with one trillion dollar deficits pretty much negates their words, IMHO.

And this will be my last post on the subject, as I don't want to hijack the thread any further.

ETA: I think politicians don't care because the American people don't care. There have even been studies done, asking if responders if they are concerned about the deficit: "Oh yes, yes, very concerned." Then the same population was asked if taxes should be raised or spending should be cut. The most frequent response was "Neither."

 

Edited by Happy2BaMom
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