2018 Taxes

[OldEagle]

So I spent a whole hour of time last night beginning my 2018 federal tax return. Having received my wife and I's W2s I was kind of excited as I considered the prospects of a better tax result for our family in 2018. The increased standard deduction (we were close to the new standard amount with itemization in 2017) and rate decreases are cool but the doing away of the person exemptions sucks. Basically from what I can tell so far, my tax situation improves none, and may even be worse than prior years. That is strange to me because I have heard a lot about the good the tax law changes will bring. Still a lot of detail for me to wade through though so hopefully my initial high level view is off.

Disclaimer: I chose off topic to keep this about 2018 tax return filing and how it goes for others but I am well aware this teters on the edge of a political topic.

Last year was my first refund in 6 years, this year is my second. Better than last year. Love the new tax base. 4 years ago i reduced my withholding's to married and 0 with and extra $20 per pay period added in. Now it looks like i can eliminate the extra $20.

 

[deadeyededric]

I'm pretty much paying the same rate. Could have been worse!

 

[bos]

poor financial education in this country in my opinion. But thats another topic.

This is very much a rising problem. Flashback to my twenties I suffered from this greatly. I was lucky enough to start working at a bank before I finished my degree. I learned so much from financial advisors. It turned my life around. My parents were never great with money and in retirement they struggle more than they should have had to. Financial education definitely opens up your eyes.

 

[Trice]

This is very much a rising problem. Flashback to my twenties I suffered from this greatly. I was lucky enough to start working at a bank before I finished my degree. I learned so much from financial advisors. It turned my life around. My parents were never great with money and in retirement they struggle more than they should have had to. Financial education definitely opens up your eyes.

Financial education is just like anything else in life. It's not enough to simply be taught it in high school or college. You have to go through experiences like buying a house or doing your taxes in order to see the system in action for yourself. And to be good at it, you have to engage with it and want to learn how to be better at it. If you consider it a necessary evil and spend as little time as possible with it, you're probably not going to be good at it.

Oh, and *always* be wary of anyone who gives you advice and tries to sell you products at the same time. Not that the sales aspect of it automatically invalidates the advice...but it's an inherent conflict and you just need to know that going in.

 

[bos]

Financial education is just like anything else in life. It's not enough to simply be taught it in high school or college. You have to go through experiences like buying a house or doing your taxes in order to see the system in action for yourself. And to be good at it, you have to engage with it and want to learn how to be better at it. If you consider it a necessary evil and spend as little time as possible with it, you're probably not going to be good at it.

Oh, and *always* be wary of anyone who gives you advice and tries to sell you products at the same time. Not that the sales aspect of it automatically invalidates the advice...but it's an inherent conflict and you just need to know that going in.

Agree completely. Excellent post.

 

[Boxerdaddy]

I get that. I didn't want to muddy things up more by saying "assuming your income and expenses stay roughly the same."

Couldn't you just put in last years numbers in for this year to see what the difference would be? Then compare to last years return?

 

[CascadeClone]

Oh, and *always* be wary of anyone who gives you advice and tries to sell you products at the same time. Not that the sales aspect of it automatically invalidates the advice...but it's an inherent conflict and you just need to know that going in.

This is what my parents have for financial advice and knowledge. They've never been swindled, but higher cost and/or lower return type investments. Usually local people they know, who also do insurance. Plus they are the classic "guaranteed return" type folks, so they end up with 3% guaranteed over 15+ years. Oh boy.

I got lucky. Didn't know anything about personal finance beyond "have a budget". But at 23 and first job, employer started a 401k for everyone, brought the advisor in to educate everyone. I love numbers and money and was hooked. And young enough it made a big difference. Time value of money FTW.

Neither me with my BS in Engineering, or my sister, with her MS in Econ, ever learned thing 1 about personal finance or investing...

 

[ClonesTwenty1]

I actually got more than what I thought I would. This tax cut I believe was pretty successful for a lot of Americans. Any little bit helps.

 

[Antihawk240]

Forgive me, I do not mean to talk down to anyone or insult anyone. I saw 2018 Taxes thread and it hit a nerve and when I opened it up about 5 minutes into it I read someone frustrated about their tax return not being as much as it was in the past years.

My wife and I just started the 2018 tax return filing, the preliminary outlook shows we are going to have to pay a lot in taxes again. We both have very well paying jobs where we have a significant portion taken out as well in taxes. We take advantage of every tax saving encentive. We also own our own business along with our W2 jobs. This business also makes good income, and we also take advantage of any tax saving incentive there as well. I should not complain because we are blessed.

But to see that I owe $12,000 in Federal and State income taxes on top of the taxes that were already withdrawn from both my Wife and I's paycheck every other week, is frustrating, especially when I already pay in quarterly estimates for our business. I then hear other peoples frustration about their tax return not being as big as they liked. All I can hear is those blasted election commercials with the people putting down one party saying over and over "Everyone should pay their fair share".

Sorry, done ranting. Again, I'm not talking down to anyone or casting judgment on anyone. But when someone posts about their tax return not coming fast enough or this year they only got $1800 back instead of $2100 back, forgive my frustration, my sighs, and my eye rolls.

 

[Dr.bannedman]

filed last week and the refund is in my account now

 

[IcSyU]

Couldn't you just put in last years numbers in for this year to see what the difference would be? Then compare to last years return?

You want this year's numbers in last year's return to compare. That shows you if there hadn't been tax changes what the return would have been. Then you compare what would have been vs 2018 reality.

 

[mdk2isu]

This is very much a rising problem. Flashback to my twenties I suffered from this greatly. I was lucky enough to start working at a bank before I finished my degree. I learned so much from financial advisors. It turned my life around. My parents were never great with money and in retirement they struggle more than they should have had to. Financial education definitely opens up your eyes.

Agreed. Love my parents and they have done the best they can, but they just didnt know much when it came to personal finance outside of try to stay out of debt. We were a lower middle class farming family with 3 kids in a small town. I appreciate everything they did for my brothers and I growing up, but they could only teach me what they knew.

Thankfully I met some people during my college years that were successful financially and were willing to teach me how to handle my money in a way that can actually create wealth.

 

[isufbcurt]

. This business also makes good income, and we also take advantage of any tax saving incentive there as well.

There's your problem. You need more expenses for your business. Please PM me your address so I can get a bill out to you asap lol.

 

[Trice]

Forgive me, I do not mean to talk down to anyone or insult anyone. I saw 2018 Taxes thread and it hit a nerve and when I opened it up about 5 minutes into it I read someone frustrated about their tax return not being as much as it was in the past years.

My wife and I just started the 2018 tax return filing, the preliminary outlook shows we are going to have to pay a lot in taxes again. We both have very well paying jobs where we have a significant portion taken out as well in taxes. We take advantage of every tax saving encentive. We also own our own business along with our W2 jobs. This business also makes good income, and we also take advantage of any tax saving incentive there as well. I should not complain because we are blessed.

But to see that I owe $12,000 in Federal and State income taxes on top of the taxes that were already withdrawn from both my Wife and I's paycheck every other week, is frustrating, especially when I already pay in quarterly estimates for our business. I then hear other peoples frustration about their tax return not being as big as they liked. All I can hear is those blasted election commercials with the people putting down one party saying over and over "Everyone should pay their fair share".

Sorry, done ranting. Again, I'm not talking down to anyone or casting judgment on anyone. But when someone posts about their tax return not coming fast enough or this year they only got $1800 back instead of $2100 back, forgive my frustration, my sighs, and my eye rolls.

There's no reason for someone to be surprised by their taxes. They publish new tax brackets months before the new tax year starts. Even if your income is variable, you ought to be able to rough out the numbers at any point throughout the year and adjust your withholding if you choose.

Obviously that requires a willingness to dig into the numbers that many might not have, but if you own a business this shouldn't be foreign to you. Or have an accountant do it.

But it sounds more like you just feel like you pay too much in taxes, period. And that's just a philosophical problem you'll have to come to grips with. Tax rates haven't been lower in our lifetimes than they are now.

 

[wxman1]

There's no reason for someone to be surprised by their taxes. They publish new tax brackets months before the new tax year starts. Even if your income is variable, you ought to be able to rough out the numbers at any point throughout the year and adjust your withholding if you choose.

Obviously that requires a willingness to dig into the numbers that many might not have, but if you own a business this shouldn't be foreign to you. Or have an accountant do it.

But it sounds more like you just feel like you pay too much in taxes, period. And that's just a philosophical problem you'll have to come to grips with. Tax rates haven't been lower in our lifetimes than they are now.

Bingo. Don't want to pay the taxes? Don't make the money. You are still making more money than you would have by not doing the work/making the money.

 

[besserheimerphat]

The wealthy pay the bulk of the taxes...surprise...surprise.

We are trying to keep this out of the cave.

Well duh. You can't squeeze water from a stone, and people with little money don't have much to tax.

 

[isufbcurt]

Bingo. Don't want to pay the taxes? Don't make the money. You are still making more money than you would have by not doing the work/making the money.

The following is a real life conversation I had with a client who makes approx. $400,000 in W2 wages a year and has approx. $125,000 withheld for fed and IA taxes a year:

He asked me if he should ask for a pay decrease so he wouldn't be paying so much in taxes. Before I had the chance to answer his wife called him a moron and told him no way in hell was he asking for a pay decrease.

 

[wxman1]

The following is a real life conversation I had with a client who makes approx. $400,000 in W2 wages a year and has approx. $125,000 withheld for fed and IA taxes a year:

He asked me if he should ask for a pay decrease so he wouldn't be paying so much in taxes. Before I had the chance to answer his wife called him a moron and told him no way in hell was he asking for a pay decrease.

Reminds me of when Phil Mickelson was supposedly going to stop playing because of the taxes. Dude you are still making a **** ton of money. Also made it better since his main sponsor is KPMG.

 

[IcSyU]

The following is a real life conversation I had with a client who makes approx. $400,000 in W2 wages a year and has approx. $125,000 withheld for fed and IA taxes a year:

He asked me if he should ask for a pay decrease so he wouldn't be paying so much in taxes. Before I had the chance to answer his wife called him a moron and told him no way in hell was he asking for a pay decrease.

I had an S Corp owner argue he should convert to C so the company paid the taxes instead of him.

 

[MeowingCows]

The following is a real life conversation I had with a client who makes approx. $400,000 in W2 wages a year and has approx. $125,000 withheld for fed and IA taxes a year:

He asked me if he should ask for a pay decrease so he wouldn't be paying so much in taxes. Before I had the chance to answer his wife called him a moron and told him no way in hell was he asking for a pay decrease.

I can't fathom being in a position to take in that much income, yet still somehow have zero understanding of how to effectively manage it.