General Question

Tropical_Willie's avatar

For USA tax payers; How's your "tax cut" working out?

Asked by Tropical_Willie (24109points) 1 week ago

The “three card Monte” was to reduce your income taxes, but all they did was reduce the withholding percentage (more money in your paycheck), take away many deductions (65 or older deduction is gone) and give the money to the “one percent”!
We paid seven percent more in taxes this year over last year; same expenses but way fewer tax deductions allowed.

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42 Answers

elbanditoroso's avatar

I owe $2K more than I did last year, thanks to the tax cut. What a crock.

MrGrimm888's avatar

I actually just read an article that said many Americans will receive 8.4% less (on average) money in their tax returns, thanks to the new tax plan.

rebbel's avatar

I wonder if there is going to be a difference in tax returns on the two different sides of the political spectrum.
And how those potential differences will get spun.

Tropical_Willie's avatar

The “one percent” are the wealthiest and yuge backers of Trump and GOP party, @rebbel. they’re receiving the benefits.

flutherother's avatar

It isn’t all bad news: the President himself will be $12 million better off and his son in law will save at least $5 million a year. Source

ARE_you_kidding_me's avatar

^^Did all of you itemize? I have not done my taxes yet so I’ll have an answer for mine here shortly.

SQUEEKY2's avatar

Gee what happened to saving the average working American family $4000 no $2000 a year now they owe more and take home actually less,boy that Trump he sure is for the average working joe.
And yet his base still loves him???

Tropical_Willie's avatar

@ARE_you_kidding_me The deductions evaporated;

local tax for house & vehicles deductions GONE

over 65 deduction GONE

You can’t itemize if the the class of deductions went to ZERO !

ARE_you_kidding_me's avatar

@Tropical_Willie That was no surprise. If you itemized it was known that the tax cuts would affect you negatively. I’m not in a position to itemize so if all is correct my standard deduction should nearly double and I should get about double the refund this year. I’ll believe it when I see it though. About 70% of taxpayers take the standard deduction.

JLeslie's avatar

I’m very curious to see what happens to my taxes. It might be difficult for me to easily figure out if I was hurt or helped since 2018 is so different than prior years. I’ll try to come back to this Q once I’ve done my taxes.

@MrGrimm888 What does that bean 8.4% less back. That seems like an irrelevant number. Who cares what people got back? What matters is was the tax obligation more or less. Was the amount being taken out of paychecks the exact same before the Trump tax changes as after? I ask because I had more than one Trump supporter friend of mine post on Facebook at the beginning of 2018 how they were taking home more money now.

Tropical_Willie's avatar

@JLeslie If you used TurboTax or other computer package for taxes, they compare their numbers for the last few years, I think.

Tropical_Willie's avatar

@ARE_you_kidding_me Those “standard deductions” disappear in couple years so . . . . you’ll be in the same spot 2020 or 2021.

JLeslie's avatar

@Tropical_Willie I use an EA, but I assume she uses something like Turbo Tax. We sold our business, so it’s an unusual year. The business actually earned about the same as 2017, but we sold at a little bit of a loss, so I don’t know how that all rolls out. The business did have depreciating asserts also, so we’ll see what happens. I guess I should be thinking in terms of my corporate taxes being totally separate from personal, but since I have an S Corp I think of it all together. I don’t remember if I itemized last year, I’d have to look at it. If I did it was by a small margin.

rojo's avatar

My 94 y. o. M.I.L. did worse than last year. She made slightly more from her annuity and her SS and ended up getting back about 57% less than last year (to be fair, when the amounts are in the hundreds, small dollar amounts those percentages change drastically).

I am doing my daughters now and will let you know but right now even with all her deductions it looks like the standard deduction will comp. her the most money albeit slightly less than comparable to last year. BUT, not finished yet.

Not sure about me yet, still waiting for paperwork.

JLeslie's avatar

@rojo You can;t look at getting back, you have to look at how much taxes she owed in total. How much she got back is only a function of how much she paid in during the year. If her annuity doesn’t automatically withdraw taxes, or if she has an IRA that doesn’t, then she is likely going to owe more if she made more.

MrGrimm888's avatar

^8.4 % less. Not sure now to re-articulate that. I mentioned it, because the OP mentioned 7%.

Yes. Taking more home would be nice. But that’s not what I am hearing is happening.

Tax refunds are sort of like a bonus, for many Americans. They count on them. They can finally fix their car, buy something nice, or catch up on bills etc. I can guarantee that most Americans thought the new tax plan didn’t mean they got almost 10% less in their returns. The tax plan was declared to be a benefit to every income level. An extra few bucks per paycheck is nice, but ultimately I think most Americans prefer the lump sum of a decent return.

There will be kids who won’t get braces because of this. The economy should suffer as well. I guarantee that people won’t spend as much as they would have with a return they were more accustomed to.

As I’ve mentioned before, 83% of the new tax plan only benefited the top 1%. Now, people will start to see the ramifications of the way things are with the new plan. The GOP claimed many people would be able to buy new cars, as a result of the plan. Let’s watch how reality plays out…

JLeslie's avatar

@MrGrimm888 How much money you get back at the end of the year is not a measure of whether you paid less taxes. You have to take into account how much you paid in. What’s the total? You made $50K and you paid a total of $10K last year and $10,300 this year? That’s how you know if your tax nugget was bigger or not. If you didn’t make exactly the same amount of money this year vs last year you might have to figure the percentage paid.

If you have less taken out of your check every month you will get less back this year even if the tax laws didn’t change at all.

I’m not defending Trump’s tax plan, I am just explaining that if people only look at how much they got back in their refund, they may be overlooking whether they actually paid less or more.

MrGrimm888's avatar

^I attempted to make that clear when I just said “An extra few bucks per paycheck is nice”....

I understand what you are saying…

JLeslie's avatar

@MrGrimm888 So, are you saying people were not taking more home in their paycheck, and they also didn’t get back as much as last year? I had some friends who said their paycheck got bigger, back several months ago, but I am not sure what affected it. I have no idea how my paycheck was affected (I would have to look it up) because I don’t watch that money come in at all, my husband does, but I am the one who takes care of the taxes at the end of the year.

kritiper's avatar

Still too early for me to answer. Ask again about April 15th.
I don’t pay “income” tax, since I don’t make enough but I do pay “self employment” tax and that is the item I’m curious about.

Tropical_Willie's avatar

I’ll ask again the first week of April.

@kritiper if you owe you may want to find out how much now.

JLeslie's avatar

@kritiper I don’t think SS or medicare withholding requirements changed.

kritiper's avatar

@JLeslie Medicare will apply next year. SS starts, with any luck, in 5 years.
@Tropical_Willie If I owe, my estimated payments should cover it. Should. Thanks. If not, Trump lied to me, too. What I pay for estimated taxes has always been enough before and I always pay twice as much as needed. ???

MrGrimm888's avatar

@JLeslie . I’m not sure what’s going on. I guess people’s employees didn’t withhold enough from their checks, so now people either get way less, and many owe money.

I haven’t done mine yet. Sounds like people didn’t get bigger checks, but will still get less/owe on their returns…

As much as I’d like to slam Trump/the GOP on this,
I don’t think we can get an accurate picture of how the new tax plan worked until after tax season. Then we’ll be able to revisit this topic, and see what the total effect was on the American people….

Tropical_Willie's avatar

@MrGrimm888 The withholding tables employer used made sure more money was in the pay checks, less money for end of year income taxes. GOP And Trump’s decision.

MrGrimm888's avatar

Sounds like a lot of employers got the math wrong maybe. The stories that have made it to the news are almost all bad. That’s why I said we should let the dust settle, then look at the big picture…

Tropical_Willie's avatar

The Federal TABLES were changed by a new Tax Law. Not an ooppsie by the Employers.

They by law have to follow the tables and the tax law .

MrGrimm888's avatar

Well. The solution most popularly mentioned so far, is to have employers withhold more money, in the future. So someone messed up somewhere…

Tropical_Willie's avatar

~ ~ ~ ~ ~The President and GOP would never mess-up, all the third graders would they? ? JK

Trump’s boys are million of dollars ahead with the new tax laws.

stanleybmanly's avatar

This question brings me to a conversation with a Lyft driver on Friday that finally distracted me from that word game here, and I’ve been wondering about it since. How many Americans do you suppose simply slip away into the underground economy? Do you know such people?

SQUEEKY2's avatar

@stanleybmanly this will find more and more people doing things under the table, but will it be enough to live on I really doubt it.
The GOP again prove they are for the wealthy the working man can pay all the countries bills.

stanleybmanly's avatar

That’s what I mean. I know lots of people doing things “off the clock” to supplement their income, and the deluge of Uber/lyft drivers here makes me wonder how many folks use those jobs for “cover”?

MrGrimm888's avatar

^Uber doesn’t take taxes out. The drivers are subcontractors. Fyi….

ARE_you_kidding_me's avatar

So I’m getting the same refund I did last year within about $50. Overall with the larger standard deduction and less taxes coming out of my weekly check it looks like I paid about $3000 less in taxes in 2018. If the cuts expire I believe I’ll be where I was in 2017 only without the option to itemize.

Tropical_Willie's avatar

@ARE_you_kidding_me There will be fewer and fewer deductions in the future and the middle class will pay for the 1% receiving reduced taxes.

ARE_you_kidding_me's avatar

@Tropical_Willie So you’re coming around to the understanding that higher taxes on the middle class are not a good thing then?

Tropical_Willie's avatar

Higher taxes on the middle class and a “Free Ride” for the Trump high dollar backers is what I see

~ ~ ~So are you are a 1 % per center or a one half per center @ARE_you_kidding_me ? ? ?

rojo's avatar

Ok, here you go.
Retiree, mid 90’s fixed income from annuity and SS, minor income from rental. Income in the low to mid 20’s. Based on her actual return, these are the percentages generated.

Amount of income subject to taxation (that is after deductions/exemptions) 2017 = 43.48%, 2018 = 46.36%

Taxes as a percent of income after ded/exemp.2017 = 4.36%, 2018 = 4.42%.

Taxes as a percent of actual income 2017 = 10.03%, 2018 = 9.54%

So if she had had an income of $25,000.00 both years then:

In 2017 the taxable amount would have been $10,870.00 and it would have been taxed at a rate of 10.03% for a total taxes of $1090.00.

In 2018 the taxable amount would have been $11,590.00 and it would have been taxed at a rate of 9.54% for a total taxes of $1,105.00.

So, if she had actually had the same income for both years, she would have come out owning $15.00 more this year than last year. So, at least in this case the vaunted Republican Tax give-a-way did not amount to a hill o’ beans.

I am sure it differs for the different tax brackets and even for incomes within those brackets since the standard deduction is not on a sliding scale within the brackets but a fixed constant. This is just a real world example for someone at the lower end of the income scale.

JLeslie's avatar

@rojo Thanks! At the top you wrote “Taxes as a percent of actual income 2017 = 10.03%, 2018 = 9.54%” so that’s lower for 2018, but then in the end paying more money in 2018. You lost me a little there. Can you explain that for me?

rojo's avatar

@JLeslie What I am saying is that if she had made the same amount of money both years then after the deductions/exemptions the amount that was taxable was greater in 2018. So, even though the percentage of tax was less, the taxed amount was higher resulting in an increase of taxes owed.
$10870.00×10.03% = $1090.26
$11590.00×9.54% = $1105.69

JLeslie's avatar

@rojo Got it. Now, I understand. Thanks!

Tropical_Willie's avatar

Thanks @rojo. figured we it was the charitable donations; about the same for both years and not allowed for 2018 taxes. :>(
Charities in the future could take a “Hit”.

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