View Full Version : Get Ready for a Nasty Tax Season Surprise
Doc Safari
03-20-19, 17:43
I don't know if you've heard, but it's all over the internet that the tax cut from 2018 is leaving a LOT of people having to pay a surprising tax bill April 15 because a lot of the deductions and allowances no longer apply and people didn't adjust their withholding or estimated taxes.
For me it was worse than surprising--instead of breaking nearly even I have to cough up almost $3,000.00 this time.
I won't go into why, but that is a shocker.
You might want to start your taxes now if you put it off, because I'm actually going to have to sell some firearms to avoid having to pay that on installments.
Good luck!
I was extremely happy with mine. I got back 2-3 times what I normally pay.
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I don't know if you've heard, but it's all over the internet that the tax cut from 2018 is leaving a LOT of people having to pay a surprising tax bill April 15 because a lot of the deductions and allowances no longer apply and people didn't adjust their withholding or estimated taxes.
For me it was worse than surprising--instead of breaking nearly even I have to cough up almost $3,000.00 this time.
I won't go into why, but that is a shocker.
You might want to start your taxes now if you put it off, because I'm actually going to have to sell some firearms to avoid having to pay that on installments.
Good luck!
Do they add interest to the installments? If not, I'd pay the installments before I'd sell anything.
We had to pay about 3 times more beyond what we deducted than we did last year, a lot of that was due to my wife being able to retire early, we still haven't really got the whole retirement budget thing figured out yet. So I'm not sure how the tax cuts impacted us.
About ten years ago, when we paid off our house and had to start paying taxes and insurance (which formerly had been escrowed) it was an eye-opener to me just how much those items cost.
Ours was a significant increase over last year, as was the return of several others at the college I teach at. Go figure.
Needless to say - we are quite pleased.YMMV
geezer john
Coal Dragger
03-20-19, 18:41
Haven't done our taxes yet.
Usually I have about $13-$14K in travel related deductions that fall under transportation industry employee category. However, given that the standard deduction is now $12K and we will probably file jointly as a married couple I expect my taxes to be way simpler and come out about the same. We have toddler and claim no dependents so it might be a bit larger return this year given the child deduction or whatever it is went up.
All of my coworkers said taxes were way easier this year and results were about the same.
We also have an inheritance that my wife got in 2018 but it falls under the Federal cap, and we have no tax issues in SD with it. Nice windfall that we still haven't figured out how to invest, so she's just sitting on some stocks and 6 figure sum in cash.
I got less back but payed less in each month.
Business_Casual
03-20-19, 19:21
I’m paying too, you aren’t alone.
My income numbers were a bit higher this year (thank you Fed interest rate increases) but my total tax due was well below last year; therefore, my refund of estimated taxes paid was quite a bit higher. Edited to add: The increased standard deduction to $13,600 for us old folks helped also.
We are getting back less this year than the year before but we paid way less this year. This was the first full year for my wife in her new career after school so we earned $50k more this year and she was crazy under taxes.
We owe NJ more but that is because we live below our means and don't pay enough property tax. F Nj.
As someone that makes decent money, I'm happy. I was really worried. For me, it basically washed out. I got fewer deductions, but paid less overall. Almost no refund, but that's the goal. I don't want the gummint getting an interest free loan with my money.
donlapalma
03-20-19, 19:55
I got a $6 federal refund. I was pretty damn happy with that.
glockshooter
03-20-19, 19:58
We got less back, but I fully expected too. Almost everyone paid less into taxes over the year, so by paying less in you get less back. I had a pretty big increase and specifically more on 10-99s. I also feel like there were several warnings put out since the tax law changes about this.
All of my income was non- taxable, dropping us down a tax bracket, that coupled with the baby and having a mortgage to write off, we came out slightly better than the previous year.
I was extremely happy with mine. I got back 2-3 times what I normally pay.
Sent from my iPhone using TapatalkHad the same thing!
Outlander Systems
03-20-19, 20:54
I make more than I ever have and my taxes were the lowest I’ve ever had in my life.
I was extremely happy with mine. I got back 2-3 times what I normally pay.
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gunnerblue
03-20-19, 20:54
I owe a little bit this year due to a non-taxed lawsuit settlement- otherwise I would’ve broken even. The biggest change for me is the current and future lack of charitable donations
I owe every year, but I did have a lower overall tax bill so I was pleased at the end result. Paid in less throughout the year and I'll be sending a smaller check than anticipated in April.
ramairthree
03-21-19, 02:50
Most people had less withheld all year.
It was actually meant to be a tax break.
I was stuck for about ten percent less on the same income compared to the old system.
I was worried about the new SALT limits.
Between the increased standard deduction and new brackets it made up for it.
A ton of people are complaining their refund was less or they owed money.
Most of these people actually owed less in taxes compared to the old system.
Some people ended up worse off. But not the feds fault. It is because they live in a state that taxes their income and property very disproportionately compared to other states for their level of income and property values.
Basically, it was meant to be a tax break. But some states tax so much there was a hole for some that did not make enough to be better off under the new palm.
Ours was a significant increase over last year, as was the return of several others at the college I teach at. Go figure.
Needless to say - we are quite pleased.YMMV
geezer john
A local college professor is a regular guest on a morning talk radio show and he claims he paid $6000 more in taxes and his fellow professors had similar expiriences. This is in Alabama, where house prices and taxes are moderate. Of course, he is the liberal voice on a consetvative show.
For what it is worth, I paid slightly less tax this year.
What happened was the law went into effect but the IRS didn’t have time to get guidance out on what the new with holdings should be. So yeah people got caught flat footed because they never adjusted for the change. It’s all timing related.
Do they add interest to the installments? If not, I'd pay the installments before I'd sell anything.
We had to pay about 3 times more beyond what we deducted than we did last year, a lot of that was due to my wife being able to retire early, we still haven't really got the whole retirement budget thing figured out yet. So I'm not sure how the tax cuts impacted us.
About ten years ago, when we paid off our house and had to start paying taxes and insurance (which formerly had been escrowed) it was an eye-opener to me just how much those items cost.
And this is why we are truly enslaved by our Government. You never really own your house. You are just leasing it from the Government at a rate non-negotiable to you. Disagree? Stop paying those property taxes and see what happens.
Doc Safari
03-21-19, 09:03
And this is why we are truly enslaved by our Government. You never really own your house. You are just leasing it from the Government at a rate non-negotiable to you. Disagree? Stop paying those property taxes and see what happens.
It's worse than that. I'm being penalized for not paying enough taxes to withdraw some money from a retirement account to pay some debts. I'm literally having to pay more of my own money to the government to get to my own money in a retirement account. That's like telling the bank you want to withdraw some money from your account and they tell you, "Okay, but we get to keep a big chunk of what you take out as our tip."
And this is why we are truly enslaved by our Government. You never really own your house. You are just leasing it from the Government at a rate non-negotiable to you. Disagree? Stop paying those property taxes and see what happens.
Yep.
[emoji35][emoji91][emoji35]
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Outlander Systems
03-21-19, 09:23
This dude knows whassup.
And this is why we are truly enslaved by our Government. You never really own your house. You are just leasing it from the Government at a rate non-negotiable to you. Disagree? Stop paying those property taxes and see what happens.
Crow Hunter
03-21-19, 10:02
It's worse than that. I'm being penalized for not paying enough taxes to withdraw some money from a retirement account to pay some debts. I'm literally having to pay more of my own money to the government to get to my own money in a retirement account. That's like telling the bank you want to withdraw some money from your account and they tell you, "Okay, but we get to keep a big chunk of what you take out as our tip."
Are you 100% sure that you did all your taxes correctly?
I am not trying to be mean but the only people that had their taxes increased this year were people in very specific circumstances. The vast majority of the tax paying populace got a fairly significant reduction. Only those who live in a high property/income tax state and/or relatively large mortgages are getting hit by this.
Do you have a large mortgage or very high property/state income taxes? Such that you normally file a Schedule A with greater than $12,000?
If not, there may be a mistake that is hitting you.
If you are needing to pay $3,000 more then you likely had at least $14,000 more in income that you didn't pay taxes on. That is over $1,000 a month.
Now if you took money out of a retirement account you should have been prompted to withhold at least 10% as a default and you would have to actively choose to not have the withholding. If you chose to not have that money withheld, that is on you.
Retirement money in an IRA, 401k, 403b, etc has never had taxes taken out of it. So you HAVE to pay taxes on it when you take it out. So your representation isn't really accurate. It isn't the same as a bank account where you have paid taxes on it and continue to pay taxes on it as it earns interest. Money in a retirement account didn't have taxes paid on it when you put it in and you didn't pay taxes on the earnings until you take it out.
It wouldn't be fair for you to take money you saved and spend it without paying taxes on it.
If you want to PM me some general information I can try and help you work through it and see if there is something you might have missed/done wrong. I help people with taxes all the time.
Crow Hunter
03-21-19, 10:07
And this is why we are truly enslaved by our Government. You never really own your house. You are just leasing it from the Government at a rate non-negotiable to you. Disagree? Stop paying those property taxes and see what happens.
Actually that is 100% true. Unless you have some very special land with Allodial title, you DON'T actually own it.
You "own" it via fee simple which is actually a form of feudal ownership handed down for centuries. Where it used to be that the King owned the land and you as a feudal lord worked the land via your serfs for the King, now, you own a feudal title to property owned by the State.
You will not ever get Allodial title to it either, that is very, very rare. The idea that a person "owns" property is a complete misrepresentation of actual law and is very often misunderstood.
https://en.wikipedia.org/wiki/Fee_simple
And this is why we are truly enslaved by our Government. You never really own your house. You are just leasing it from the Government at a rate non-negotiable to you. Disagree? Stop paying those property taxes and see what happens.
I frame it a little differently, but, yeah, I get what you are saying.
Dr. Bullseye
03-21-19, 12:57
It's worse than that. I'm being penalized for not paying enough taxes to withdraw some money from a retirement account to pay some debts. I'm literally having to pay more of my own money to the government to get to my own money in a retirement account. That's like telling the bank you want to withdraw some money from your account and they tell you, "Okay, but we get to keep a big chunk of what you take out as our tip."
Doc, retirement accounts are the mechanism by which the government tracks your money. Think about an Obama-like dictator bailing-in the government by taking all the money in people's retirement accounts and then slowly paying it back to them--or not.
I am retired. Please consider I do not want a big bank account from which to dip into and live. This seems to be what non-retired people want. But what I really want is a source of income. All retired people need a flexible source of income, not a 401K or even a Roth IRA. Rental property would be great. Rental land would be great. A loan to a relative for that relative to buy a house would be great. The government really never knows the real or true value of what you have so it is hard for them to seize it or tax it.
Rental property would be great. Rental land would be great. A loan to a relative for that relative to buy a house would be great. The government really never knows the real or true value of what you have so it is hard for them to seize it or tax it.
They could probably seize your RE holdings as easily as your 401K, but if it makes you feel better.....
I ended up owing $2700 more than normal.
sundance435
03-21-19, 14:05
I am retired. Please consider I do not want a big bank account from which to dip into and live. This seems to be what non-retired people want. But what I really want is a source of income. All retired people need a flexible source of income, not a 401K or even a Roth IRA. Rental property would be great. Rental land would be great. A loan to a relative for that relative to buy a house would be great. The government really never knows the real or true value of what you have so it is hard for them to seize it or tax it.
Have you ever dealt with an assessor's office? If so, I can't imagine making a comment like that.
Rental dwellings/businesses are a huge pain, unless you're paying someone to manage them (which is usually at least 30% of the rent). Rental land would be better, but the return is far less, unless you can find a solar developer for it (tying it up for at least 25 years, in that case). The government always gets its cut - it usually favors a "bird in the hand", e.g. transfer and property taxes, than being able to squeeze every cent in revenue that it can.
Edited to add: I saw a noticeable difference in take-home after the new tables went into effect. My return was smaller than usual, but the increase in take-home more than made up for it. Not a huge benefit for me overall, but not nothing, either. I've heard from numerous accountants that the only people who were hurt by this are a very small subset with unique tax circumstances (especially self-employed professionals) - some of whom will probably be addressed through a "fix" of the new corporate pass-through rates.
Averageman
03-21-19, 16:57
Edited to add: I saw a noticeable difference in take-home after the new tables went into effect. My return was smaller than usual, but the increase in take-home more than made up for it. Not a huge benefit for me overall, but not nothing, either.
And this is the key.
You might not notice the benefit in your check, but you'll notice the lack of a return, which is backward thinking.
I'm retired, my money is my money and It's for the most part tax free. I got $300.00 back this year, but the year before I was paying nearly 40%, even more if you consider the taxes on fuel, food and licences.
I'm pretty happy.
I’m getting hit by some new tax code. I drive my own vehicle in my sales position. I can no longer deduct my mileage above what is reimbursed by my employer.
It’s a good $4K I’m taking a hit on.
I ended up owing $2700 more than normal.
Was your year's total tax bill $2700 more than normal? Or did you just end up paying because of not enough withholding.
It's worse than that. I'm being penalized for not paying enough taxes to withdraw some money from a retirement account to pay some debts. I'm literally having to pay more of my own money to the government to get to my own money in a retirement account. That's like telling the bank you want to withdraw some money from your account and they tell you, "Okay, but we get to keep a big chunk of what you take out as our tip."
Correct me if I am wrong but isn’t withdrawing money from a retirement account considered income? If you are taking money out before a certain age, you could be penalized as well.
I got back a little more than last year. I need to adjust my withholding. I don’t really care for giving the Government an interest free loan.
sundance435
03-22-19, 08:18
I’m getting hit by some new tax code. I drive my own vehicle in my sales position. I can no longer deduct my mileage above what is reimbursed by my employer.
It’s a good $4K I’m taking a hit on.
Unfortunately, a lot of people took a hit on "unreimbursed business expenses". I'm not aware of a way around it, but some creative accountant may.
And this is the key.
You might not notice the benefit in your check, but you'll notice the lack of a return, which is backward thinking.
I'm retired, my money is my money and It's for the most part tax free. I got $300.00 back this year, but the year before I was paying nearly 40%, even more if you consider the taxes on fuel, food and licences.
I'm pretty happy.
Yes, I'm all for not giving the government an interest fee loan. I have no issues with keeping more of my money throughout the year. Like I said, I even came out ahead in the end. Wasn't a huge difference for me, but I'm not unhappy about it, either. I would like to see a noticeable increase in capital spending from corporations, since they got a far better deal (not just through a lower nominal rate).
Correct me if I am wrong but isn’t withdrawing money from a retirement account considered income? If you are taking money out before a certain age, you could be penalized as well.
I got back a little more than last year. I need to adjust my withholding. I don’t really care for giving the Government an interest free loan.
Yes, assuming it was a 401(k), the money was pre-tax. There's a 10% penalty on top of income taxes paid for early withdrawal, but my guess is that that's probably in place to keep us little guys from making investments with tax-free income and then paying a lower rate on the investment income. Corporations have all kinds of tax gimmicks at their disposal to do just that, though.
Crow Hunter
03-22-19, 08:44
I ended up owing $2700 more than normal.
Did you calculate your effective tax rate for 2017 vs 2018?
Take your taxes owed for that year and divide it by your AGI for that year.
I would be extremely surprised if you wound up having that number be higher in 2018 vs 2017. Very, very, very few people had their effective tax rates go up. Even people who thought they were going to get burned by the SALT reductions found out that they are no longer getting hit with the AMT and still having lower tax rates.
For instance my AGI went up roughly 4.5% in 2018 but my effective tax rate went down from 15.5% to 13%.
Unless you have been doing a Schedule A for significantly more than $12,000 single/$24,000 joint due to state taxes/mortgage interest/medical expenses/etc and not paying the AMT, you should be "paying" less.
Now if you didn't adjust your W-2 and didn't have enough taken out, then you might have to pay more at the end of the year but your effective tax rate likely still went down, even if you had to "pay in more" for 2018 because you didn't have enough withheld.
The usual for me, getting a little more back from fed than I have to pay to state. I try to keep it as close as possible so they don't get to play with my money all year. :)
I would like to see a noticeable increase in capital spending from corporations, since they got a far better deal (not just through a lower nominal rate).
You dreamer, you.
I would like to see a noticeable increase in capital spending from corporations, since they got a far better deal (not just through a lower nominal rate).
Like most corporations this year, my company sat back and tried to figure out how much better things really were going to be. As soon as I found out I would have significant savings I shared some of that savings with employees (through raises) and purchased several new pieces of equipment. Call me crazy, but I don't think corporations should pay ANY taxes. They exist to provide income to their shareholders. If there is a dividend paid out, there are taxes paid on that. If there are exorbitant salaries paid to board members, there are taxes paid on that. The pay that goes to employees of a corporation is taxed. All a tax does to a corporation (if they sell a product) is raise the price of the product.. and that's a tax on everyone who purchases that product.
ThirdWatcher
03-23-19, 02:40
Last year was my first full year of retirement. My tax rate dropped from 25% to 12%. I paid a little less in taxes during the year and I’ll receive less in my refund. Kind of a wash...
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