Have you started taxes yet?

longboard55 · Feb 5, 2019

lifesavacation said:
I didn't realize how much of the tax code falls in the gray area until our business was audited. And after the audit when I was looking for a new accountant, the three I interviewed all made sure I knew they were legally just "advisers" and not to be held responsible for any misinterpretations or mistakes. Gotta love that.

We have 2 businesses so I've done as much reading as possible on the new 20% pass through deduction. There's a lot of vagueness to it. It's not just a simple 20% pass through deduction. Thankfully, both of our businesses clearly qualify so I'm crossing my fingers that our tax return doesn't turn into a complicated nightmare. It's really great that the IRS makes our taxes so vague and complicated that even the tax professionals aren't sure.

what I get on the 20% is if your income is below the $350k married, any business qualifies. If you are over than service income does not qualify. This has got to be the biggest tax boondoggle of all times. Any rich person will be setting up all kinds of corporations to get their 20%. Even a service company will set up side companies to bury the income. This will be the accountants dream come true

lifesavacation · Feb 5, 2019

longboard55 said:
what I get on the 20% is if your income is below the $350k married, any business qualifies. If you are over than service income does not qualify. This has got to be the biggest tax boondoggle of all times. Any rich person will be setting up all kinds of corporations to get their 20%. Even a service company will set up side companies to bury the income. This will be the accountants dream come true

We have non-service related businesses with both W2 employee wages and long-term property so it doesn’t apply to me, but I can see where high earners would have incentive to split up their service business to limit their income. I hope having more than 1 business claim the deduction isn’t an audit flag. Sigh. I can see that one coming.

LSUmiss · Feb 5, 2019

Katie Dawn said:
I haven't started ours yet, but I'm confused. When the tax changes went into place I kept hearing that people were supposed to be get MORE back, not less. But so many of you are getting less and it sounds like you were expecting that to happen.

(But maybe I'm not remembering it right.)

Is it more a matter of whether the Family is low income, middle income, or upper income?

Well...that is how it was sold...but

LSUmiss · Feb 5, 2019

longboard55 said:
Yes you are confused, Corporations get the big tax break, companies like the Lebron James Corporation, or the Kim Kardashian Corporation, do you get it now?

Right, but eventually their savings will trickle down to the rest of us. :rotfl2:

Floridaman999 · Feb 5, 2019

Katie Dawn · Feb 5, 2019

LSUmiss said:
Well...that is how it was sold...but

This was my thought as well. But we probably ought to leave it there and walk away. :tilt:

wgeo · Feb 5, 2019

lifesavacation said:
I didn't realize how much of the tax code falls in the gray area until our business was audited. And after the audit when I was looking for a new accountant, the three I interviewed all made sure I knew they were legally just "advisers" and not to be held responsible for any misinterpretations or mistakes. Gotta love that.

We have 2 businesses so I've done as much reading as possible on the new 20% pass through deduction. There's a lot of vagueness to it. It's not just a simple 20% pass through deduction. Thankfully, both of our businesses clearly qualify so I'm crossing my fingers that our tax return doesn't turn into a complicated nightmare. It's really great that the IRS makes our taxes so vague and complicated that even the tax professionals aren't sure.

We actually have multiple sources of income that we pay self employment tax on. To figure out what your 20% deduction is, you take your business income and subtract your SE tax - welllll problem is that the largest source of our income doesn't qualify for the QBI - but a small part does and so when you take the income from that small part and deduct all of the SE tax that we paid, we end up with a negative deduction. So yes, the QBI "deduction" actually increased our taxes. Sigh - the fact that the government has no guidance out there for people with multiple income streams is mind boggling.

Simba's Mom · Feb 5, 2019

AlohaNow said:
I did VITA for three years! Absolutely loved it. We worked on the second floor lanai of a cafe at the edge of Waikiki, maybe that's why I loved it so much. No, it was the sincere thanks that we received for helping folks out. It was far more satisfying than my paid work has ever been. I hope you enjoy the experience!

I am just waiting on one last investment document to finalize my numbers. As the SALT limit doesn't come into play for us, we will be just fine. But we have many friends in places like Bergen County, NJ and Fairfield County, CT who are really hurting over the changes. Our property taxes, etc. here in Colorado are next to nothing.

Other members of the VITA club! I'm employed by the United Way during Income Tax season, they fund it and several of us are hired as staff, going where they need us. I may be a fill-in site coordinator, tax preparer, quality reviewer. I go to 2 different sites every week, sometimes a third and/or fourth. Our volunteers are wonderful!

LongLiveRafiki · Feb 5, 2019

With what a lot of people have been saying about getting less back/paying more this year than last, I was concerned, especially since our income increased 12.5% since last year. For us though, it worked out great.

The elimination of the personal exemption did reduce our deductions and made our taxable income higher, but the lower tax bracket meant we were taxed at a lower percentage. That combined with the bump in the Child Tax Credit gave us a nearly 50% increase in our refund from what we received last year and decreased our effective tax rate into the negatives.

FlightlessDuck · Feb 6, 2019

siren0119 said:
Yup - the benefits all went to the people who have large net worth but not a lot tied up in loans/mortgages/small business expenses.

FlightlessDuck · Feb 6, 2019

LongLiveRafiki said:
The elimination of the personal exemption did reduce our deductions and made our taxable income higher, but the lower tax bracket

And yet some of us are still in the same tax bracket as last year.

Music City Mama · Feb 6, 2019

LongLiveRafiki said:
With what a lot of people have been saying about getting less back/paying more this year than last, I was concerned, especially since our income increased 12.5% since last year. For us though, it worked out great.

The elimination of the personal exemption did reduce our deductions and made our taxable income higher, but the lower tax bracket meant we were taxed at a lower percentage. That combined with the bump in the Child Tax Credit gave us a nearly 50% increase in our refund from what we received last year and decreased our effective tax rate into the negatives.

This was basically our situation. I more or less think it was the doubling of the child tax credit (2 kids) along with the qualified business income deduction (my DH is self-employed and doesn't really claim many expenses) that got us more back than we usually get.

But, I have a problem.... :sad:

I normally don't do my taxes until February, but I was worried so I did them about 10 days ago. I used TaxAct (their online platform) and have for years, but I think they screwed something up for me.

So, even though I use TaxAct, I don't e-file, I mail the return (yes, I know, that's archaic). I always get our refund about 4 weeks later. Well, I realized that I forgot to save the PDF to my computer, so I logged back in yesterday, and the refund amount now is $54 different! I compared my copy of the printed form that I mailed and the two things that changed slightly are the qualified business income deduction and the tax on line 11. Why did it change?! So, now I'm sure even though there is a only $54 difference, my return will be rejected and I'll have to amend it or start over or something. Boo! I really don't understand what happened, I haven't changed a thing since printing the form.

kdonnel · Feb 6, 2019

FlightlessDuck said:
And yet some of us are still in the same tax bracket as last year.

There are VERY small overlaps that would allow people to remain in the same bracket for the same income.

The only tax brackets that remain the same between 2017 and 2018 are the 10% and 35% brackets.

To have remained in the 35% tax bracket your AGI would need to be between $416,700 and $500,000. Since this was pitched as a tax break for the middle class and that income range does not fall in any definition of middle class, it is not unexpected that the tax changes did not benefit you.

FlightlessDuck · Feb 6, 2019

FlightlessDuck said:
And yet some of us are still in the same tax bracket as last year.

Wait... no, I swore when I read about the tax bill before, my tax bracket didn't change. But apparently it did go down.

Yet somehow my effective tax rate went up by 0.67%. Weird.

LongLiveRafiki · Feb 6, 2019

FlightlessDuck said:
And yet some of us are still in the same tax bracket as last year.

I was simply giving info on what happened for my situation. I'm sure there are some people who are in the same tax bracket, but ours was lowered. With the exception of those in the bottom tax bracket of 10%, most lower-middle class to middle class earners did see a lower tax bracket this year for their taxable income. For single and head of house, tax brackets were lower this year than last until you made over $157,500. For married filing separately, it's 200,000, and for married filing joint, its $315,000. Some people may have had a higher taxable income due to lower deductions, but everyone's situations are different. For US, the lower tax bracket and higher CTC worked out better for us than the tax laws last year.

kdonnel · Feb 6, 2019

My tax situation changed drastically between 2017 and 2018. I have no way of knowing if I am better or worse off under the new tax laws.

I got money from a lawsuit, I have a first year college student, and converted an IRA.

FlightlessDuck · Feb 6, 2019

kdonnel said:
I got money from a lawsuit, I have a first year college student, and converted an IRA.

One of my kids graduated college and the other started college. That probably affected my deductions.

aprilgail · Feb 6, 2019

Had my taxes done last year- getting a few thousand back-same as last year. I was concerned hearing everyone saying they had to pay or got less back but it worked out ok for me. My daughter has to pay 25.00 to state this year in NY but is getting back in Boston and Federal.

longboard55 · Feb 6, 2019

lifesavacation said:
We have non-service related businesses with both W2 employee wages and long-term property so it doesn’t apply to me, but I can see where high earners would have incentive to split up their service business to limit their income. I hope having more than 1 business claim the deduction isn’t an audit flag. Sigh. I can see that one coming.

So if you are a doctor, you set up a separate company to own the property and rent it to the service company at a huge rate. Oh it will be fun

Music City Mama said:
This was basically our situation. I more or less think it was the doubling of the child tax credit (2 kids) along with the qualified business income deduction (my DH is self-employed and doesn't really claim many expenses) that got us more back than we usually get.

But, I have a problem.... I normally don't do my taxes until February, but I was worried so I did them about 10 days ago. I used TaxAct (their online platform) and have for years, but I think they screwed something up for me.

So, even though I use TaxAct, I don't e-file, I mail the return (yes, I know, that's archaic). I always get our refund about 4 weeks later. Well, I realized that I forgot to save the PDF to my computer, so I logged back in yesterday, and the refund amount now is $54 different! I compared my copy of the printed form that I mailed and the two things that changed slightly are the qualified business income deduction and the tax on line 11. Why did it change?! So, now I'm sure even though there is a only $54 difference, my return will be rejected and I'll have to amend it or start over or something. Boo! I really don't understand what happened, I haven't changed a thing since printing the form.

generally something like that the IRS finds with their computers, will just bill you the difference or send you a check, you do not have to refile. I would not worry about it. It might happen in a couple months

STLDisney_Freak · Feb 6, 2019

Already done and filed.

Received our federal refund today and mailing off our payment to state of Missouri today as well.

Have you started taxes yet?

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