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Old 13th February 2019, 03:46 PM   #1
Scopedog
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2018 Tax Reform Experiences

I've been hearing news stories about reduced Federal tax returns this year and I'd like to discuss anecdotal 2018 Tax Reform experiences. A change in tax return from 2017 to 2018 isn't a useful measure of the effects of the 2018 Tax Reform on an individual. The tax return only represents whether too much or too little was withheld from your pay during the year. I can understand why an unexpectedly low tax return may be disappointing but what matters is Total Tax from the 1040 Instructions 2018 Tax Table. The change in Total Tax indicates whether you owe the government more or less than the previous year regardless of how much was actually withheld during the year.

Definitions:
AGI- Adjusted Gross Income
Deductions- the amount that AGI is reduced by
Taxable Income- the amount that Total Tax is based on
Total Tax- the amount owed from the 2018 Tax Table
Credits- the amount that Total Tax is reduced by

I live in California and these are the changes I experienced from 2017 to 2018:
$2,112.00 AGI
-$1,320.00 Deductions
$3,432.00 Taxable Income
-$591.00 Total Tax
$0.00 Credits

What this means:
AGI- my income increased in 2018
Deductions- I wasn't able to deduct as much
Taxable Income- I moved higher on the 2018 Tax Table
Total Tax- I owe less for 2018
Credits- I had no credits in either year

In case of any confusion, this is the formula:
2018 AGI minus 2017 AGI
2018 Deductions minus 2017 Deductions
2018 Taxable Income minus 2017 Taxable Income
2018 Total Tax minus 2017 Total Tax
2018 Credits minus 2017 Credits

Conclusion:
2018 Tax Reform benefited me

Feel free to modify the format for more unusual tax situations.

Last edited by Scopedog; 13th February 2019 at 05:46 PM.
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Old 13th February 2019, 03:50 PM   #2
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Alternatively, this would have been the effect on my 2017 Federal taxes if 2018 Tax Reform were applied to the 2017 AGI:
$0.00 AGI
-$1,320.00 Deductions
$1,320.00 Taxable Income
-$1,053.00 Total Tax
$0.00 Credits

Conclusion:
2018 Tax Reform would have benefited me in 2017.

Last edited by Scopedog; 13th February 2019 at 04:11 PM.
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Old 13th February 2019, 04:20 PM   #3
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No real change for me. My taxes went up a bit, but so did my income. What I got back from the feds was pretty much cancelled out by what I owed the state: net result was $19.05 extra to me. Which I shall spend on Friday, on Valentine's candy on sale! Nothing like bargain chocolate to sweeten a taxing week.

The increased standard deduction was nice, even if it didn't actually save me much, just for letting us skip the extra paperwork of listing items and keeping all those receipts, etc. For 2017's taxes I spent ten hours going through receipts, bills, EOBs, and constructing spreadsheets to track, calculate, and prove all my ridiculous dental expenses that year.
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Old 13th February 2019, 05:54 PM   #4
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I'm in denial, haven't even started looking at it yet.
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Old 13th February 2019, 06:14 PM   #5
Dread Pirate Roberts
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I made 5K more in 2018, but my tax due was 1500 less than 2017.
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Old 13th February 2019, 06:27 PM   #6
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Originally Posted by Dread Pirate Roberts View Post
I made 5K more in 2018, but my tax due was 1500 less than 2017.
Do you mind mentioning your state?
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Old 13th February 2019, 07:08 PM   #7
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Originally Posted by Scopedog View Post
Do you mind mentioning your state?
Nevada, so I don't have state income tax. I know that's a thing now with the limited deduction. I also don't own a home, so I don't itemize anything.
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Old 13th February 2019, 08:17 PM   #8
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Since my income changed, I recalculated what my 2017 tax would have been using the 2018 rules. The net result would have been exactly a 1% reduction in the amount of federal tax paid.

The downside for me is that both Tax Act and Turbo Tax no longer allowed me to file for free due to having to file a Schedule 5 (ACA payments/credits reconciliation). Both sites waited until I completed entering everything before informing me I wasn't eligible for free e-file. I ended up using freefilefillableforms.com, which is basically just electronic versions of the paper forms with a few auto calculate fields thrown in.
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Old 13th February 2019, 10:03 PM   #9
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Originally Posted by Scopedog View Post
Do you mind mentioning your state?
I know you didn't ask me, but I live in Japan.

That's a hell of a picture you've got for an avatar. I know what it is. Care to explain?

For anyone who doesn't recognize the photo:

https://en.wikipedia.org/wiki/Inejiro_Asanuma
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Old 14th February 2019, 06:37 AM   #10
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My income was about $8500 greater in 2018 than in 2017, but I paid about $645 more in taxes in 2018 than in 2017.
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Old 14th February 2019, 06:45 AM   #11
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I won't be able to tell, because I moved from a low cost of living state to a relatively high cost of living state, with a corresponding bump in income, so my taxes were going to be very different regardless.

My understanding is that people who took the standard deduction in the past may come out slightly ahead, but those who itemized are likely worse off.

People with mortgages, student loans, high local and state taxes, and other large line items that were previously deductible may be in for a rude awakening.
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Old 14th February 2019, 08:52 AM   #12
Dread Pirate Roberts
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Originally Posted by SuburbanTurkey View Post

My understanding is that people who took the standard deduction in the past may come out slightly ahead, but those who itemized are likely worse off.

People with mortgages, student loans, high local and state taxes, and other large line items that were previously deductible may be in for a rude awakening.
That's probably why I came out ahead even with the bigger income. My only adjustment is alimony paid. No deductions of any kind.
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Old 14th February 2019, 08:56 AM   #13
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still waiting on my $%^&*( co-op board to get me my paper work before we can file.
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Old 14th February 2019, 08:56 AM   #14
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2015 - 4,300 return
2016 - 4,200 return
2017 - 3,700 return (I was deployed in a combat zone most of that year, which weirdifies taxes a bit)
2018 - 4,200 return
2019 - 135 dollars owed.

Now to be fair there was some pretty big lifestyle changes, left the military, moved from a purely military income (which carries its own weirdness with it as far as taxes go) to a split military pension / civilian salaried job income but that's a pretty huge difference seeing as how within 5% I'm making the same amount of money.
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Old 14th February 2019, 10:30 AM   #15
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Originally Posted by JoeMorgue View Post
2015 - 4,300 return
2016 - 4,200 return
2017 - 3,700 return (I was deployed in a combat zone most of that year, which weirdifies taxes a bit)
2018 - 4,200 return
2019 - 135 dollars owed.

Now to be fair there was some pretty big lifestyle changes, left the military, moved from a purely military income (which carries its own weirdness with it as far as taxes go) to a split military pension / civilian salaried job income but that's a pretty huge difference seeing as how within 5% I'm making the same amount of money.
Since your 2018 tax situation (what you label as 2019) is complicated, it might be informative to apply your 2018 Taxable Income to the 2017 Tax Table and see if your Total Tax would have been higher or lower under the previous law.

2017 Tax Table:
https://www.irs.gov/pub/irs-prior/i1040gi--2017.pdf

Or, if possible, try applying all the 2017 rules to your 2018 income.

Last edited by Scopedog; 14th February 2019 at 10:34 AM.
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