Do you (think you) know how the new tax laws will affect your taxes?

[Ruken]

And when they turn 18?

[Tim_R.Mortiss]

I get paid once per month. My January paycheck had about $140 less federal withholding than my December paycheck. Of course that doesn’t reflect the changes in deductibility of property taxes, which are astronomical in Chicago where I live.

[Dangerosa]

@jacobsta811

I’m not sure I see how having an odd number of kids does anything in the new tax system ? For children under age 17 at the end of the year, you lose their personal exemption but gain an additional $1000 tax credit ($2000, was $1000)- in most marginal tax brackets that is a net advantage, or at worst close to a wash vs the old system.

It isn’t the odd number, its the number greater than two (or three, I’m not sure where the cutoff is and I’m not in a math mood).

[Bone]

@Dangerosa

It sucks for people who didn’t itemize before, but have three or five or seven kids. To me it looks like a huge middle finger to the middle American Evangelical movement, who often have more than 2.5 children and don’t have the incomes to itemize.

My understanding is that you can take the child tax credit even if you take the standard deduction. That’s win/win.

[John_Mace]

@Bone

My understanding is that you can take the child tax credit even if you take the standard deduction. That’s win/win.

Yes, I think so, too. BTW, here is more detail from The Motley Fool:

I mentioned earlier that the personal exemption is going away, which could disproportionally affect larger families.

However, this loss and more should be made up for by the expanded Child Tax Credit, which is available for qualified children under age 17. Specifically, the bill doubles the credit from $1,000 to $2,000, and also increases the amount of the credit that is refundable to $1,400.

<snip>

If your children are 17 or older or you take care of elderly relatives, you can claim a nonrefundable $500 credit, subject to the same income thresholds.

So, you don’t lose out completely when the kiddo turns 17. (Refundable means that you get a check from the feds if your credit exceeds your tax liability. Nonrefundable means you are SOL if your credit exceeds your liability.)

[thelurkinghorror]

The child tax credit is the same as it’s always been except bigger. That means that, as a credit, it comes in after your tax is calculated (usually good) and can be refundable (not fully but for most tax payers). The earliest versions of the tax bill almost had the same old tax credit (or worse?) until Senator Rubio threatened to vote against the bill without the bigger credit.

[ZipperJJ]

@Bone

You’ll probably benefit from the 20% haircut for passthrough income. That could be a nice windfall.

My business is an LLC and the business’s books are completely separate from my own. I get a W2 every year, same as someone who works for Wal Mart . Just so happens that I’m the one who signs the checks and stuff (as opposed to my business partner). So all that being said, the “passthrough” stuff has nothing to do with my situation right?

[Ruken]

LLCs and S corporations are pass-through tax entities. But I haven’t paid attention to how the new rules work there.

[elfkin477]

@Doctor_Jackson

Here’s a “post change” tax calculatorfor those who want to get an idea how their taxes may be affected in 2018. I’m not advocating the accuracy of the site, it’s just one I found…

So, does this calculator leave out FICA or something? Because I ran the numbers and it estimates my 2018 “federal taxes” will be less than 1/3 of my 2017 federal taxes…

[thelurkinghorror]

Almost every tax calculator does federal income taxes, and leaves out FICA, state tax, etc. I don’t even pay FICA, just the medicare portion.

[Bone]

@thelurkinghorror

The child tax credit is the same as it’s always been except bigger. That means that, as a credit, it comes in after your tax is calculated (usually good) and can be refundable (not fully but for most tax payers). The earliest versions of the tax bill almost had the same old tax credit (or worse?) until Senator Rubio threatened to vote against the bill without the bigger credit.

It’s not just bigger. The income limits are raised quite a bit too. Previously married income limits were like, 110K. That basically means lots of two income families in my area are priced out. Now, the married limit is 400K. Still some folks priced out, but less so.

[Bone]

@ZipperJJ

My business is an LLC and the business’s books are completely separate from my own. I get a W2 every year, same as someone who works for Wal Mart . Just so happens that I’m the one who signs the checks and stuff (as opposed to my business partner). So all that being said, the “passthrough” stuff has nothing to do with my situation right?

I’m not aware of your circumstances of course, but it could be worthwhile.to take income as a pass through from your LLC rather than as W2 income. Previously there were advantages to doing it the way you stated, and those probably still exist to an extent, bit it’s very likely the 20% haircut on passthrough income would overwhelm those.

[thelurkinghorror]

@Bone

It’s not just bigger. The income limits are raised quite a bit too. Previously married income limits were like, 110K. That basically means lots of two income families in my area are priced out. Now, the married limit is 400K. Still some folks priced out, but less so.

You’re right, I just mean it shouldn’t work differently than it does in the past.

[Roderick_Femm]

@Doctor_Jackson

Here’s a “post change” tax calculatorfor those who want to get an idea how their taxes may be affected in 2018. I’m not advocating the accuracy of the site, it’s just one I found…

Thank you, doctor, this is precisely what I have been trying to find (Google apparently thinks I stink at searching), or else either a formula or a tax table so I could do it myself.

Based on this, my taxes actually will go down by about $450 next year. That brings my fed and state refunds up towards $4k, which is way too much. I’m definitely going to have to change some of my withholding percentages.

@Bone

Since I started paying taxes, I always did my taxes twice a year. After filing around the end of the 1st quarter, I would recalculate my expected tax for the following year and adjust withholdings, etc. Then, at the beginning of the 4th quarter, I would do the same exercise, to see if my withholding was on track. This gave me enough time to make adjustments as needed. Over the years I had built a fairly decent model that calculated all of this while allowing me to enter in the appropriate variables.

Now I have to rebuild it. Oddly, I’m looking forward to it.

I can’t argue with that description; for myself, I would be happy to not have to think about it so much. It was easier when I was earning one salary.