Why is it only two choices? I’d consider it neither.
I would call Johnny’s pittance (if it is accurate once he sees his check details) “crumbs”. That lady that was excited she could pay for her Costco membership with her HUGE windfall was crumbs.
I would call yours a nice amount (I have no idea of your salary though). Definitely not a rich folk though. Once you start saving 5 to 6 figures, you are rich folk.
Does that help you?
And no one will know their real savings until they fill out their return in 2019. I’m hoping the dipshits running the government get this right and lots of people don’t end up having to pay. Looking at Mnuchin, I’m guessing it won’t go well.
Liberal here. My decreased FICA withholding is $72 per pay period, or $1,728 per year (based on 24 pay periods per year). Not a pittance, but not a game changer either. Another data point for the collection…
Edited to add, that I consider myself comfortably upper-middle class, but by no means rich.
On another note, I don’t think the change in withholding is necessarily an accurate gauge of the ultimate impact of the tax law. There are some things that are not reflected in people’s withholding amounts - whether due to complexity or because the employer simply doesn’t know about them - which is why you have adjustments (mostly refunds) at year end. There are also some people who have an incorrect number of dependents on their employer’s files.
To the extent that the new law affects things which are not typically reflected in withholding amounts to begin with, then the impact of new law would not be captured by the change in withholding.
Property taxes would be one example, in which case people with SALT above $10K might be seeing paycheck savings which turn out to be illusory. OTOH, spousal income would be another, and the change in tax rates would be impacted here, which cuts the other way.
They got it exactly right: everybody looks like they’re getting a tax cut (because of the lower withholding tables), and that’s all they’ll see before the midterm elections. Whether people end up having to pay or not come tax filing time isn’t even part of the consideration.
I think the lower rates may cut in the other direction. Because the rate cut is higher for income at middle-income levels. And one thing that’s not reflected in withholding is spouse income. So the withholding calculation would be based on the presumption that a higher percentage of income is at lower levels than is actually the case for most people who have working spouses.
Using the rates in the above link, consider the following example. You have a couple where each spouse is making $38K, or $76K in total. If you calculate the numbers for each spouse individually, you think they only save 2% on the amount between $9,525 and $19,050, or $190 annually for each - $380 in total. (The rates below $9,525 are unchanged at 10% and the rates between $19,050 and $38K are unchanged at 12%.) But in reality if they file jointly they will also save 10% (22% - 12%) on all joint income between $38,700 and $76,000, which is an additional $3,730 in tax savings that each employer doesn’t know about and doesn’t reflect in paychecks.
For lower-middle-class people this type of scenario is probably a much bigger deal than eliminating SALT deductions above $10K.
Too late for the edit but note: the above numbers are off because I used single rates and didn’t reflect the difference between single rates and family rates. But the general principle applies anyway.
Just checked and withholdings are down $2,800 for the year. But withholdings have always been too low for me. Every year I have to pay extra to avoid the IRS penalty (for 2017 I had to pay $3,800 extra). So I won’t know until a year from now if I really paid less or not.
I live and work overseas so the Foreign Earned Income Exclusion dwarfs any changes. No surprise. Doesn’t change my obligations to local tax authorities, of course.
Didn’t a past prez try something similar - changing withholdings so we’d appear to have a “raise”? I believe the idea was that too many people were getting large refunds, so they’d be better off having that money thru the year.
I didn’t fall for it, and I had additional taxes withheld, so I didn’t get screwed in April like so many others did.
The headline is “30M Taxpayers Will Owe More Due to Low Withholding.”
But the text of the article has this buried in it: “About 27 million taxpayers would have been affected even if the new law hadn’t been enacted. The changes, however, added an estimated 3 million to that number.”
So, if you actually read all the way to the end of the article, it is only saying that the number went up by 3 million, not 30 million. It seems like either a very poorly written or a very deceptive article.
So at the risk of resurrecting a zombie, we no longer have to speculate. The GOP’s “Middle Class Tax Cut” cost (not saved) me $6500 in taxes this year (most of it because of the “Blue State Penalty” where they capped the deduction for state/local/property taxes).
How about the rest of you? How are your MASSIVE tax savings?
My situation is complex and changing, so there is no way to compare last year with this, but I do have employees who are doing their taxes now.
Most have not done them yet, but one employee who has always taken 2 deducation on the w-4, and always gotten back a small amount on her return is saying that she is going to owe quite a bit this year.
Be interesting to see how many are still thanking the GOP for their tax cut come mid April when they are writing out checks to cover it.