Very Large increase in 2018 Taxes

[NCperson]

best to dissect the impact of the tax law changes from withholdings ......not aware of any changes to IRAs in the tax law change

1)  take out the 2017 Form 1040 and divide line 63 (total taxes) by line 37 (adjusted Gross). for 2018,  on Form 1040, divide line 15 (total tax) by line 7 (adjusted Gross).  Assuming relatively similar income from one year to the next, that percentage difference is the impact of the tax law change

2) take the difference of the resulting percentages and multiply by the 2017 Form 1040 line 37 and THAT is the dollar impact of the tax law change against last year's income. For example, let's say the percent was 10% last year and 11% this year and the Adjusted Gross was $50,000 last year. then the impact of the tax law against last years' gross was $500 ((11%- 10% * $50,000)

3) take the difference between what your refund was last year and subtract what you owe this year and then subtract the result from #3. that  is the impact of withholdings. For example, if last year's refund was $300 and you now owe $1,000 then that difference is $1300.   then if the result of #3 was $500, then the tax law caused you to pay an extra $500 and changes in the withholding tables drove the other $800 ($1300 - $500)

a lot of math, but it can help understand what is tax law driven and what is withholding driven

[anhenry546]

Someone who finally knows what they are talking about! Maybe that will clear up some of the confusion.

[anhenry546]

It sounds like you need a CPA to look at your return because the tax brackets did not change, the only change that was made to them was that the standard deductions were higher (in a good way). A single person in 2017 that made over $82,500 would go on to the next tax bracket, 24%. But in 2018 that same person could make up to $84,200 before moving to the higher tax bracket. That's the only change to the rates and it was put in place to HELP people, not hurt them. So from what you are saying that is impossible, your effective tax rate could not have doubled if nothing changed. I have to call BS on that, sounds like someone else who doesn't want the tax cuts to be successful, wonder why lol? The majority of people that are complaining are the people how didn't adjust their withholdings, the irs sent a message to employers to tell them to do so, if your employer didn't tell you that then blame it on them or the irs, not the President.

[beethoven100]

Mine went up enough to have to deal with underpayment penalty issue on both federal and state level which seems to be preventing e-filing my returns so I have to paper file which is an extra hassle on top of the tax increase.

[NCperson]

Beethovsn14 ——- if you have penalty on form 2210, hold off filing

There is a known bug that was posted yesterday by the moderator

Search on ‘2210’ to find that post

[NCperson]

Beethoven14 - there is a reported bug that was introduced on Feb 14

Search these boards for “2210” for explanation and to sign up for updates on the fix - in ma y cases the federal penalty will go down

[HonokaaBoy]

YES. Last year we received more than $6000 in federal and state refunds. This year we owe feds almost $800 and state refund went from $1440 to $280. This with me claiming ZERO deductions at work. Granted, I had a little more 1099 side income this year than last, and my spouse started working and knocked us just into the bottom of the next tax bracket up, but a $6000+ drop is clearly the result of something else (i.e., "tax cuts"). And mortgage interest is meaningless now. Now need to file a new W-4 with my employer asking them to withhold additional tax each paycheck. First time in my life I'd had to do this. 

[Geddy]

Honestly, the bottom line is the total tax, not the refund. I can see it being a bit harder for single taxpayers with modest incomes and those with a lot of dividend income without any witholdings.

[Clark]

I agree.  Now that I am completely retired my wife and I have a lot of small incomes that do not take out a lot of taxes to cover the sum.  Most do not take out any state taxes and two incomes do not participate in taking out Virginia income tax.

[Concensio]

Yes, there was a significant impact to me due to the cap on taxes (income and property).  I lost over 20k in deductions related to property.  Perhaps this affected you also.  

[Geddy]

For many, the new tax law was a trade off of large itemized (state income tax and property tax) minus AMT limitations last year versus increased standard deduction, no AMT and lower rates this year. For me, despite losing $20,000+ in deductions, slightly increased AGI, I had a slightly lower tax bill. Again, if not married, asingle payer status would probably flip that

[OhTheQuestions]

A big tax increase!  I'm in the low end of the tax bracket as a disabled former teacher and normally get back about $1,200.   Even itemizing this year I am only getting back $582 - less than half the usual amount.  My very slight increase in income this past year couldn't possibly account for this much increase, I wouldn't think; my taxable income in 2018 was only $9,389.   The Republican tax plan sure didn't do this commoner any favors.

[PaulaM]

You might look at your state, local, property and sales tax deduction (SALT). This deduction has been capped at $10,000. See this link for how the 2018 Tax Reform affects your taxes.

[anhenry546]

It did me, I got about 2k more this year and next year I'll have $700 more since obamacare won't be taking that money. Did you adjust your withholdings like you are supposed to do every single year? If not then that's on you. I'm so sick of seeing people complain about something they could have prevented if though would have just paid more attention to these things.

[anhenry546]

It also seems like people don't seem to comprehend how taxes work. If you aren't getting as much back it's usually because you didn't overpay. The refund you get is the money you OVERPAID to the government. By overpaying you are basically giving the government an interest free loan. You may have gotten less back but it means you paid in closer to what you should have and you didn't overpay. If you ended up owing money then you obviously did not adjust your withholdings like you are supposed to EVERY SINGLE YEAR. Don't blame the government on your mistakes. But Ifor you did end up with a smaller refund it also means you probably had more each paycheck, which really is the better way to do it. If someone has $100 taken out a month that is that much less on their check, if that person falls on hard times and has to get a small loan to make it until next paycheck they end up paying fees and interest on that money that they could have had if they didn't have it taken from their check to be put in a government account until tax time. See the pattern? It's much better to have your money now rather than get a larger sum at the beginning of the year.