I have two kids and didn’t itemize, so I came out ahead. If I didn’t have 2 kids, I would have broken about even. The really big one for us is the Qualified Business Income Deduction. My wife is self-employed as a contractor for the state, so we get to deduct 20% of her income. Sweet!
Effectively doing away with the deduction for people on the low end of the donation spectrum. The rich, of course, can still benefit.
I’m sympathetic to the argument that the higher standard deduction poses a risk to charitable institutions by reducing the incentive to donate. But I have trouble accepting the argument that you (or anyone else on the “low end of the donation spectrum”) is harmed because the higher standard deduction makes it more advantageous for you not to itemize.
In any event, my only point was that it is misleading (at best) to say that the tax law “did away with deductions like charitable contributions” when what you really mean is that, in fact, they did not “do away” with deductions for charitable contributions but that, instead, given your rate of charitable giving it does not make sense for you to itemize and take that deduction.
(I am more sympathetic with it comes to deductions that were actually eliminated).
I planned it well. Got a $100 refund which ballooned up to $600 because I thought the child tax credit completely disappeared at 17, instead of being cut in half as it was (from $1k to $500).
As to how the new tax law affected me, ask my CPA. I just did what she told me, and here we are.
True, on the low end you wouldn’t be able to use the donation deduction, but only because the standard deduction is so much higher.
In my case, if I itemized I’d have about 12k in deduction, but the standard deduction is 18k. So while I didn’t write off what I deducted, it’s not like I owed more/was refunded less because of it.
And, as others said, you’re still more than welcome to itemize and write off your donations, it just wouldn’t be worth it.
If my wife and I had a kid, it would have saved us some money (over our hypothetical 2017 tax burden if we had had a kid then, too). As is, we paid a few hundred more dollars this year than last year, but only because my wife earned us a tax credit that saved about 1,200 dollars by going to grad school – if she didn’t do that, we’d be paying a lot more this year over last year.
For next year, we need to either have a kid, buy a house, or send me to grad school; otherwise we will be paying a lot more in taxes.
Having done all those, if your motives are purely financial just keep the tax hit.
I can’t actually say. I’m getting a bigger refund, but that’s more a function of putting more money in my 401k and my health insurance going up, so my income dropped.
I first thought I’d get an enormous refund, which made no sense to me until I checked and saw I left off a decimal point, increasing the exempt income tenfold.
It’s hard to tell, exactly, as I had some extra income last year (I cashed in some savings bonds from the late 1990s - up through 2002 or so, if you bought a bond, the government guaranteed that it would double in value after 18 years), but I think the only effect was, mine went up by about $400 because (a) my state income tax went up, and (b) because of that, it ended up covering just about the entire $10,000 I could deduct for state and local taxes under the new law, so I couldn’t deduct my $2000 or so property tax.
Just finished my taxes, and the total taxes that I owed the Federal Government was $1250 less than last year. Of course, they screwed up the withholdings so I have to pay money.
I believe my wife and I benefited from it, though it’s hard to know by exactly how much since our income has changed. I’m not surprised by this considering our overall household income.
I paid 2.2% less federal income tax in '18 compared to '17. State has been zero for years.
Last year my pay check was larger to the point where I could afford to go to McDonald’s for lunch a couple of times per month. (Not that I do; just using a general point of reference.)
My taxes aren’t finished yet, but it looks like even though I’ve lost a couple of deductions, the new basic deduction is large enough that I’ll be paying several hundred dollars less than 2017.
We had an accountant do our taxes for the second time since I’m not comfortable trying to figure out the LLC taxes. The business had a bunch of expenses last year, and net for the Feds was something over $4K coming back to us. Unfortunately, the state handles some aspects of business differently, and we ended up owing them over $7K, so net, it was a sucky tax year.
Honestly, I have no idea how we would have been affected had we not had the business.
My adjusted gross income is a little bit higher than last year. My marginal tax rate is down quite a bit, but I lost a huge amount of deductions – I’m in a high income and real estate tax state. So, net, my overall (not marginal) tax rate is down 1.37% at the federal level. That is, I take the total taxes I have to pay divided by my AGI and that percentage is down 137 basis points.
I know some of these changes sunset over the next few years, but I don’t know the details about how it will affect me.
Now that our returns are done, it looks like we will benefit materially on our federal return (although the two years are not directly comparable enough to quantify it).
However, a decent chunk of the benefit is offset by the fact that I’m paying more in state tax because (it turns out) Virginia’s standard deduction is really quite low (which I’ve taken now for the first time since I’m now taking the federal standard deduction and you’re required to do the same on your state return). Google tells me that this was a predicted and somewhat “hot” issue at the end of the year, but I can’t quite figure out who in the General Assembly wanted to do what about it.
I know some people who itemized on the Federal, even though it resulted in more tax, just so they could itemize on their State taxes. Have you looked into that?
Originally, we came out ahead by about $40.
Then one of my wife’s IRAs dropped a 1099-DIV on us (after I’d already filed), which after I did the 1040X and associated state form, wound up costing us a few hundred, entirely on the capital gains from that one investment. Sheesh.
My tax went up $62. Refund was up substantially, but that’s mostly poor planning in 2017 and overcompensating in 2018.
Note to everybody: there is no federal law saying that you can’t take the federal standard deduction but itemize on state or vice versa. Many states (e.g. California) allow this. Apparently Virginia is one state that forbids it. And of course if legal in your state, some tax software may make this easy or hard to do.
Good question. I’ll ask my tax guy. My federal tax cut was greater than my state tax increase, but I don’t know how much of that was due to the increase in the standard deduction. A lot of the deductions I was used to taking were capped or eliminated, so I may be doing a great deal better with the standard.
Yes. In case that was unclear: Virginia law (apparently) requires a taxpayer to itemize (or not) on his state return in the same manner as his federal return. I am aware of no such federal requirement either way.