2018 Taxes
 

Anybody else done their taxes yet and got smacked by the new tax laws?

I got hammered by the SALT removal living in Maryland, to the tune of $4k. Never had to pay before. Only one deduction, married filling single. Guess I am going to zero...

My wife is an accountant, she loves the new simplified forms and we were able to take more deductions despite not having very much mortgage interest. Per what she says the changes made were all very beneficial. All of which means I am getting a nice refund!

Sounds like your issue is with the state of MD?

Worked on mine last night. My wife and I have a mix of 1099 and w2 incomes. Using turbotax, the process seemed more streamlined from previous years with the standard deductions being larger than the itemized. I still have some more digging around to do with the numbers but so far it has been a pleasant experience. As pleasant as tax preparation can be.

We miss out on a combined $8k in property tax and GA state tax deductions due to the $10k limit - effectively a reduction of about $3k in our tax refund. I haven't completed the return yet but have an Excel spreadsheet I use during the year for planning, so I've got a pretty good model for what to expect with the change. Since I try to manage withholding during the year to minimize the refund amount I don't think we will have to pay anything extra - just won't get anything back instead.

I'm down to zero deduction, no mortgage, loss of SALT, no medical deduction. So I'm getting a huge tub of KY ready.

No net change this year from last year for me.

I got my returns back from our CPA yesterday. I anticipated a super bad outcome this year, primarily due to losing $6k in property tax deduction and the cap on mortgage interest. I changed my exemptions in April from 7 to 5. That apparently was enough to balance it out. I owe some chump change to the Feds and have a small refund coming from CA FTB. Tremendous relief. I might go buy a new spoon.

It will be interesting to see how both the housing market and the states adjust to the loss of SALT. I read that it is expected that itemized filers will drop from 22% ish to below 8%. We were only $6k over the new standard deduction this year. SALT was a big chunk of what allowed a lot of folks to itemize.

The 2018 brackets are the lowest and will rise in the future up to 2025 where they will come back to current levels... but without the SALT to offset them.

I do think that taking the mortgage deduction out is a good thing. IMHO, it only drove up housing prices, problem is, there is no way to adjust your principle for one that bought under the 'old system'. IIRC, mortgage deduction was considered more you could add 20% on the typical payment.

Now we just need to get rid of the child deduction. Society pays for that crap with property taxes.

Wife and I are actually talking about her going part time to save money that is just being lost to taxes... how broken is that.

I got tired of sending the IRS a $12,000 check every April so I went single and zero last year.
I'm hoping it makes a difference but haven't done maths yet.

EDIT: that $12k was for a combination of fed and state taxes owed.

Sammy:
How did you avoid paying interest? It is my understanding that anything over $1k involves a fine.

My CPA did a side by side comparison when he did my 2018 tax estimate last fall. I saved about $20K with the new tax laws compared to the old. Given the amount of tax I pay that was disappointing, but at least it's something. I am in the S-corp pass-through loophole that leaves out anyone in a "service" industry = me, from most of the cuts given to small businesses.

I owe quite a bit more than last year...still not quite sure how that happened but will spend some time looking into it before filing.

Thing that pisses me off is they penalize you if you under pay, even though its a new tax system this year, and if you over paid it's "hey, thanks for the interest free loan!"

I am anticipating needing the KY again this also even though I already claim 0.

With the new business, we've just finished the 2018 financials. Now we turn it over from the CPAs to the Tax accounts. We'll see.

I believe our benefit was that we got more from the new standard deduction than we were previously able to get from itemizing. All personal no business. But I HATE accounting and do my best to avoid it at all costs, so I may be totally wrong.:cool:

I live in MD too. Sucks. WSJ ran an article the other day about how so many middle class and wealthy are leaving the high tax states and how their tax revenue is actually decreasing. New York is in big trouble and yet they gave billions to Tesla.

We'll be out of here soon enough.

Normally, you have to pay (withhold) at least 90 percent of your tax liability in order to avoid penalties and interest.
Last month they lowered that to 85% because they didn't properly update the withholding tables to reflect elimination of some deductions when the tax laws changed.
The percentage they withheld from us was high enough.to avoid interest or penalties.

Now if you file LATE, the interest is charged on anything over $1k but we never file late.

family of 4 lost 16k in deduction (personal exemptions). if they were already itemizing say 24k then the doubled std deduction does nothing for them. so taxable income is $16k higher.

child tax credit increase is helping offset that in some cases. lower tax rates help also.

the forms are no simpler. in order to meet trumps promises of post card tax forms they simply took half the lines on the first two pages and made them separate schedules.

Who is that in your avatar pic? :)