2018 Taxes

[isufbcurt]

My method obviously won't tell you WHERE the impact hits you, but since my filing conditions are basically the same, total tax divided by total (or taxable) income gives the direction.

I went far beyond "inactive" and quit everything regarding CPA stuff... Was thinking about "inactive" but I wasn't a very good CPA and thought if I ever had to go back to that line of work I'd look for anything else. I was never an "angle" guy and always had trouble with the billable hour. Lots of my old clients were new and unsophisticated and needed lots of hand-holding. Partner I worked for didn't like write-offs.

I do still brag about being a first-time passer back in 1992 thanks to the Becker course I took in Indy!

The bold is one of the reason's I like working for myself.


On the topic of this thread though, I've decided to provide my tax clients a sheet which shows them the following:

1. Deductions/exemptions lost from tax reform
2. Deductions/credits gained from tax reform
3. Net of items 1 & 2
4. Effective rate in 2017 and 2018.
5. Comparison of #3 above to the difference in #4

 

[BCClone]

The bold is one of the reason's I like working for myself.


On the topic of this thread though, I've decided to provide my tax clients a sheet which shows them the following:

1. Deductions/exemptions lost from tax reform
2. Deductions/credits gained from tax reform
3. Net of items 1 & 2
4. Effective rate in 2017 and 2018.
5. Comparison of #3 above to the difference in #4

Best to put a starting paragragh that states you are providing this information for the purpose of understanding how the changes affected your tax position. It in no way is an opinion of any political nature.

Seems there are a bunch of people that want to make everything political. Even when you are just trying to inform of changes that affected them.

 

[isufbcurt]

Best to put a starting paragragh that states you are providing this information for the purpose of understanding how the changes affected your tax position. It in no way is an opinion of any political nature.

Seems there are a bunch of people that want to make everything political. Even when you are just trying to inform of changes that affected them.

I have a good relationship with my clients so I am not worried about that, but good idea.

 

[cyphoon]

Just finished my taxes yesterday. Here is how my 2018 fed taxes compared to 2017

• AGI down 4.7% due to increased 401k contributions. Still in the 22% marginal bracket
• Taxable income nearly the same (0.5% less in 2018)
  
• Lost out on $6k of deductions due to loss of personal exemption. $24000 standard deduction in 2018 vs about $30000 of combined personal exemption and itemized deductions in 2017
  
• But lower tax rates trumped the reduced deductions. Total tax obligation down 22% over 2017
  
• Effective tax rate of 10.7% vs 12.9% in 2017
  
• The witholding changes that the IRS made were probably too aggressive. My tax witholdings were $5000 less in 2018 on similar income, which outpaced how much my taxes were reduced. No wonder people are getting refund shock.

Most of the variables between the two years were similar. The key differences were the tax law changes, and my daughter being in college for the entire year vs a single semester in 2017.

Disclaimer: I converted about $20k of IRA money to a Roth in 2018. That totally pollutes the comparison. The numbers I posted above are what TurboTax calculates when I omit the conversion. When I include it, the numbers shift a bit.

• AGI up 9.6%
• Taxable income up 17.8 %
• Tax obligation up only 3.4%
• Effective tax rate still lower in 2018: 12.16% vs 12.89%
• The SALT limit of $10k might have impacted me by killing my ability to deduct state taxes on that conversion money.
  
• Despite making an estimated tax payment on the conversion, I will be writing the IRS a check this year.

All of my Roth conversion falls in my highest marginal tax bracket, yet my effective tax rate is down despite all that perceived extra income from the conversion. There are reasons to dislike the tax law changes, but the idea that they shafted the middle class is largely overblown. Too many people focus on their refund without digging into the numbers.

H

 

[06_CY]

My method obviously won't tell you WHERE the impact hits you, but since my filing conditions are basically the same, total tax divided by total (or taxable) income gives the direction.

I went far beyond "inactive" and quit everything regarding CPA stuff... Was thinking about "inactive" but I wasn't a very good CPA and thought if I ever had to go back to that line of work I'd look for anything else. I was never an "angle" guy and always had trouble with the billable hour. Lots of my old clients were new and unsophisticated and needed lots of hand-holding. Partner I worked for didn't like write-offs.

I do still brag about being a first-time passer back in 1992 thanks to the Becker course I took in Indy!

Not all accounting firm/CPA jobs are about billable hours. We don't have billable hours, as we are a sole source contractor at a fixed fee. All of my staff have a specific workload with specific deadlines. If you get the work done on time working 40 hours, good for you. If you can't, I expect you to work what it takes to get that work done on time. But if I continually see you needing to work more than 45 hours, we are going to see why you need that many hours and see if we need to adjust the workload.

 

[casey1973]

CPA just finished mine and mentioned due to tax law change for small business owners, that is why my refund is larger than last year. Not arguing.

 

[IcSyU]

Not all accounting firm/CPA jobs are about billable hours. We don't have billable hours, as we are a sole source contractor at a fixed fee. All of my staff have a specific workload with specific deadlines. If you get the work done on time working 40 hours, good for you. If you can't, I expect you to work what it takes to get that work done on time. But if I continually see you needing to work more than 45 hours, we are going to see why you need that many hours and see if we need to adjust the workload.

I'd say you are the exception and not the rule. The billable hours thing is a bit of a joke since in general the price of your return is going to be the same as last year plus 3-5% with most firms if the returns are comparable.

 

[wxman1]

It has been over three weeks since we filed and we have not received either return.

 

[Rabbuk]

It has been over three weeks since we filed and we have not received either return.

I owe for both so, I'm waiting until april 14

 

[fsanford]

Changes to SALT are hitting me, biggest check I have ever cut to the IRS

 

[capitalcityguy]

It has been over three weeks since we filed and we have not received either return.

I assume you meant refund vs "return".

Did you file electronically and did you elect to direct deposit your refunds? Most tax software provides you with estimated date a refund check will hit your bank account (at least Federal) . If I recall, it is 7-10 business days...but my experience is that it always came sooner.

 

[cycloneworld]

Just finished my taxes yesterday. Here is how my 2018 fed taxes compared to 2017

That's an awesome comparison, thanks for doing it. Maybe a few others can do this as well to see how things actually compare to 2017. Because I definitely got an initial shock and a preliminary run shows I'll owe double that of last year.

 

[isufbcurt]

It has been over three weeks since we filed and we have not received either return.

Iowa is really really slow again this year.

Check your federal status at "Wheres my refund"

 

[3TrueFans]

I got my Federal refund in 9 days, no state yet though.

 

[wxman1]

I assume you meant refund vs "return".

Did you file electronically and did you elect to direct deposit your refunds? Most tax software provides you with estimated date a refund check will hit your bank account (at least Federal) . If I recall, it is 7-10 business days...but my experience is that it always came sooner.

Yeah that is what I meant.

Iowa is really really slow again this year.

Check your federal status at "Wheres my refund"

Thanks for the tip!

 

[Tailg8er]

I’d be interested to hear how the CK works.

Filed my federal through them about a week ago & just got my refund. Process was pretty easy & I didn't notice anything missing/incorrect (haven't checked against an H&R Block/TurboTax).

Filing a state return for Iowa wasn't available at that time, but it seems to be now (they said I'd get a notification when Iowa was available, but I didn't receive anything). Just logged on today & started the state process. After inputting everything, they have us down to be married filing jointly - nowhere to choose to do married filing separately on same return. Asked a chat rep, and they said since we are filed jointly on federal we can't choose differently for state. I told them that doesn't make any sense, so I guess we'll be filing state somewhere else.

Can't recommend because of that. Otherwise, seemed fine (and it still was free, even with minimal investment stuff).

 

[isufbcurt]

Filed my federal through them about a week ago & just got my refund. Process was pretty easy & I didn't notice anything missing/incorrect (haven't checked against an H&R Block/TurboTax).

Filing a state return for Iowa wasn't available at that time, but it seems to be now (they said I'd get a notification when Iowa was available, but I didn't receive anything). Just logged on today & started the state process. After inputting everything, they have us down to be married filing jointly - nowhere to choose to do married filing separately on same return. Asked a chat rep, and they said since we are filed jointly on federal we can't choose differently for state. I told them that doesn't make any sense, so I guess we'll be filing state somewhere else.

Can't recommend because of that. Otherwise, seemed fine (and it still was free, even with minimal investment stuff).

Yeah the chat rep is flat out wrong

 

[IcSyU]

I haven't looked at the Iowa return but it used to have a box for "married filing separately on this combined return" or something along those lines...I'd ask them about this.

 

[Tailg8er]

I haven't looked at the Iowa return but it used to have a box for "married filing separately on this combined return" or something along those lines...I'd ask them about this.

Yeah, we filed that way through H&R Block last year (& I believe TurboTax the year before). The way they claimed, it made it sound like their software just doesn't allow for that - which I proceeded to tell them was stupid, and they should probably look into fixing it.

 

[capitalcityguy]

Filed my federal through them about a week ago & just got my refund. Process was pretty easy & I didn't notice anything missing/incorrect (haven't checked against an H&R Block/TurboTax).

Filing a state return for Iowa wasn't available at that time, but it seems to be now (they said I'd get a notification when Iowa was available, but I didn't receive anything). Just logged on today & started the state process. After inputting everything, they have us down to be married filing jointly - nowhere to choose to do married filing separately on same return. Asked a chat rep, and they said since we are filed jointly on federal we can't choose differently for state. I told them that doesn't make any sense, so I guess we'll be filing state somewhere else.

Can't recommend because of that. Otherwise, seemed fine (and it still was free, even with minimal investment stuff).

For others, this should be enough to not walk, but run away from this option for your taxes. That is a basic question regarding Iowa returns.

It is stories like that that keep me using Turbotax even though I know there are cheaper options.

Thanks for sharing!