The Leopard is Eating my Face!!! A discussion of the 2018 tax reform ****ing the middle class. - Page 6 - Politics and Economics

This is a crap analogy, and I suspect you know it.

The argument for people not arranging their finances so they get a large (to them) refund held a fair amount of water when interest rates were enough that letting the feds hold onto your money cost you more than a cup of Starbucks. When the best you can hope for is a little less than 2.5% on your money, it's entirely reasonable, especially if you're not the most disciplined person in the world, to find the utility of a $3000 refund greater than getting an additional $270 or so a month, if you think you're likely to piss it away. The interest deferred on that 3K is about $70 or so (and taxable, too)

MM MD

The great thing about it is you can tune your withholdings to do whatever you want.

Just like you can enjoy smoking Newports.

Most people can setup a Treasurydirect.gov account and automatically purchase $25/paycheck in I-bonds. They could even under-pay their taxes weekly, collect the interest on the float, and top-off their taxes due when they file.

In this way, they'd also be building a secure emergency fund so they wouldn't have to dip into a credit card for 17% interest in case something happens.

So instead of just saying, "yeah its cool for folks to give their $$$ to Uncle Sam and let Uncle give them a little bit back at the end of the year", perhaps we could say, "instead, work to strengthen your financial position and pay back Uncle at the end of the year."

02-08-2019 , 05:21 PM

#127

hobbes9324

veteran

Join Date: Mar 2005 Posts: 2,872

The great thing is that it's their ****ing money to do with what they please. If they feel that getting a chunk of a few thousand works better for them, good for them.

But you do you, I suppose.

MM MD

02-08-2019 , 05:25 PM

#128

Lapidator

LLSNL Frequent Flyer

Join Date: Apr 2012 Posts: 13,762

Quote:

Originally Posted by hobbes9324

The great thing is that it's their ****ing money to do with what they please. If they feel that getting a chunk of a few thousand works better for them, good for them.

But you do you, I suppose.

MM MD

I literally said that before you. So nanni-nanni-nahhh-nahhh-I-said-it-first.

02-09-2019 , 06:32 PM

#129

Grue

Pooh-Bah

Join Date: Mar 2004 Posts: 5,667

FFS

Last year via itemizations my deduction was around $34k. This year its $24k. Last year with the same withholding I got a refund ~$2k, this year I owe $8k.

Donald Trump and the GOP cost me $10,000 in 2018.

02-09-2019 , 07:14 PM

#130

DonkJr

Pooh-Bah

Join Date: Mar 2005 Posts: 5,328

Did you forget to deduct the expenses for maintaining your yacht?

02-09-2019 , 09:16 PM

#131

Shame Trolly !!!1!

Neo-Gorean

Join Date: Oct 2013 Posts: 4,839

Quote:

Originally Posted by Lapidator

... ETA: Why isn't it a feature of progressive policy to give the Fed.Gov more $$$ every week? Seems like it would be well received that you give the $$$ up front and the Fed.Gov gives you back your change later.

This is one of the most bizarre things I've read in a while.

WTF is "progressive" about giving away interest free loans ???/?

02-09-2019 , 09:56 PM

#132

aarono2690

Pooh-Bah

Join Date: Sep 2008 Posts: 3,870

Quote:

Originally Posted by suzzer99

So are you saying it is a max of 2% of gross income? So our hypothetical trucker's gross income would have to be $1.5M for him to not be able to write off the $30k?

I’m not sure if I’m reading your question properly so let me just quick explain it. A 2% itemized deduction works as such:

Adjusted Gross Income (AGI) x .02 = 2% threshold. If your AGI is 1,500,000 then the sum of all your 2% Itemized Deductions must exceed 30,000 for them to start being deductible. Anything over the 30,000 is deductible and anything less is not. If in total it was 31,000 then he would get a 1,000 deduction. If the trucker receives 1099-MISCs instead of a W-2 they’d report this on Schedule C or relevant business return and there is no such limitation for these business expenses.

2% itemized deductions include:

-Unreimbursed employee business expenses (mileage, tools, uniforms, etc)
-Tax prep fees
-Investment expenses
-Union dues
-Professional Certification fees/licenses

This no longer exists as an itemized deduction for federal tax purposes. States probably still allow it if they did not conform.

02-09-2019 , 10:00 PM

#133

aarono2690

Pooh-Bah

Join Date: Sep 2008 Posts: 3,870

Quote:

Originally Posted by Lapidator

The great thing about it is you can tune your withholdings to do whatever you want.

Just like you can enjoy smoking Newports.

Most people can setup a Treasurydirect.gov account and automatically purchase $25/paycheck in I-bonds. They could even under-pay their taxes weekly, collect the interest on the float, and top-off their taxes due when they file.

In this way, they'd also be building a secure emergency fund so they wouldn't have to dip into a credit card for 17% interest in case something happens.

So instead of just saying, "yeah its cool for folks to give their $$$ to Uncle Sam and let Uncle give them a little bit back at the end of the year", perhaps we could say, "instead, work to strengthen your financial position and pay back Uncle at the end of the year."

To an extent, I believe the IRS can force certain withholding upon your wages if they find you to chronically under withhold. Not certain how common it is that they do this though.

Per IRS website:

Quote:

Q3: If the IRS determines that an employee does not have enough federal income tax withheld, what will an employer be asked to do?

A3: If the IRS determines that an employee does not have enough withholding, we will notify you to increase the amount of withholding tax by issuing a “lock-in” letter that specifies the maximum number of withholding allowances permitted for the employee. You will also receive a copy for the employee that identifies the maximum number of withholding exemptions permitted and the process by which the employee can provide additional information to the IRS for purposes of determining the appropriate number of withholding exemptions. If the employee still works for you, you must furnish the employee copy to the employee. If the employee no longer works for you, NO ACTION IS REQUIRED AT THIS TIME. However if the employee should return to work within twelve (12) months, you should begin withholding income tax from the employee’s wages based on the withholding rate stated in this letter.The employee will be given a period of time before the lock-in rate is effective to submit for approval to the IRS a new Form W-4 and a statement supporting the claims made on the Form W-4 that would decrease federal income tax withholding. The employee must send the Form W-4 and statement directly to the IRS office designated on the lock-in letter. You must withhold tax in accordance with the lock-in letter as of the date specified in the lock-in letter, unless otherwise notified by the IRS. You will be required to take this action no sooner than 45 calendar days after the date of the lock-in letter. Once a lock-in rate is effective, an employer can not decrease withholding unless approved by the IRS.

02-09-2019 , 10:18 PM

#134

OmgGlutten!

Pooh-Bah

Join Date: Aug 2016 Posts: 5,273

there is no way it is +EV to **** around with the IRS over trivial withholding amounts.

02-09-2019 , 10:20 PM

#135

OmgGlutten!

Pooh-Bah

Join Date: Aug 2016 Posts: 5,273

Quote:

Originally Posted by Grue

Curious what type of stuff you were itemizing last year... anytime I have looked at that, it has always been way better to just take the standard deduction.

02-09-2019 , 10:23 PM

#136

Huehuecoyotl

Carpal \'Tunnel

Join Date: Sep 2009 Posts: 29,257

Most people don't actually think of withholdings vs refund size as an actual pencil and paper math calculation. People get a job, read the withholdings sheet, do the math on the sheet, put that number down, forget about it, do their taxes and think that the refund is generated sui genesis with only some tangential relationship to their withholding number.

Which I can't really blame them. There's too much going on to be whipping out the calculator to be getting your refund as close to zero as possible in order to get that 2% edge, at most.

02-09-2019 , 10:25 PM

#137

goofyballer

Carpal \'Tunnel

Join Date: Jun 2005 Posts: 70,719

I just started a new job and had to fill out a W-4, good lord did my eyes glaze over on that worksheet

02-09-2019 , 10:36 PM

#138

Grue

Pooh-Bah

Join Date: Mar 2004 Posts: 5,667

Quote:

Originally Posted by OmgGlutten!

Curious what type of stuff you were itemizing last year... anytime I have looked at that, it has always been way better to just take the standard deduction.

shrug?

02-09-2019 , 11:33 PM

#139

fxwacgesvrhdtf

Guest

Posts: n/a

Quote:

Originally Posted by Grue

shrug?

Yeah, this is where i’m going to be ****ed this year too. The SALT restrictions coupled with the end not personal exemptions is ****ing brutal. ****ing *******s.

02-10-2019 , 02:05 AM

#140

SuperUberBob

Not interesting enough

Join Date: Feb 2006 Posts: 48,217

Talked to my mother today and heard her bitching about this stuff.

Felt it'd be wrong to take pleasure in my mother's and through that my sisters' pain since they still rely on her for money from time to time.

02-10-2019 , 02:10 AM

#141

suzzer99

Save the Cheerleader, Save the World

Join Date: Nov 2005 Posts: 99,984

Looks like I picked a good year to go straight W-2.

Republican, the party for entrepreneurs.

02-10-2019 , 09:06 PM

#142

GMan42

Pooh-Bah

Join Date: Aug 2004 Posts: 5,258

Meh. Got back about $400 from my federal last year, owe about $800 this year.

Had bumped up withholding so that we were almost dead even with what was withheld last year, still got to itemize but just barely (like $24400). Overall deductions went down a ton (mostly SALT stuff due to living in NJ) but got offset a bit by the doubled child tax credit (which we made too much to get at all last year). Would have been a bit unpleasant without that.

02-10-2019 , 09:46 PM

#143

OmgGlutten!

Pooh-Bah

Join Date: Aug 2016 Posts: 5,273

Gotcha... I bought my house for cash after the housing crash so haven't been taking advantage of that deduction which is probably stupid. No state taxes here either.

Does anyone know if you can use loses from a business to offset social security taxes from a w-2 job?

02-10-2019 , 09:56 PM

#144

StoppedRainingMen

Player Hater of the Year

Join Date: May 2012 Posts: 53,713

shoulda known there was a thread about this already

i'm an idiot

02-10-2019 , 09:57 PM

#145

Louis Cyphre

Carpal \'Tunnel

Join Date: Jun 2006 Posts: 11,025

For not including a poll in your thread? Don't be so hard on yourself.

02-10-2019 , 10:05 PM

#146

StoppedRainingMen

Player Hater of the Year

Join Date: May 2012 Posts: 53,713

anyway my before after:

2017: 9.5% net paid in taxes after receiving tax refund

2018: 9.9% net paid in taxes after receiving tax refund

bracket did not change

probably not a good thing that this not at all a tax break is temporary

02-11-2019 , 11:07 AM

#147

GMan42

Pooh-Bah

Join Date: Aug 2004 Posts: 5,258

Hey mods, we should really throw something like "(2018 tax thread)" into the title so people know what the hell this is.

02-11-2019 , 04:43 PM

#148

suzzer99

Save the Cheerleader, Save the World

Join Date: Nov 2005 Posts: 99,984

Quote:

The above is bull**** and thanks for proving it with your screen shot...

More info, would help, but I will use the worse case scenario for your friend based on he limited info. Based on the screen shot he he's married, and with the new tax law, is now unable to deduct $8556 that he was able to in 2017. This most likely is correct. Your buddy's comments say his withholding and I assume income the same. If the only change is the deduction in tax brackets and his loss of $8556 in deductions he is feeding you a line of Bull**** to say he paid $10,000 more in taxes. The difference would be the $8556 in taxable income. It appears based on his state withholding, that family taxable income is somewhere between $125k and $200k most likely, but we don't know. Assuming it's $200k he would be paying an additional $2737 in 2018 than he would have paid in 2018 if his deductions were the same as 2017. This is assuming this $8556 of income was taxed at the 32% bracket. Now let's look at the savings he received with the tax cut in 2018 over 2017. With the new tax brackets for 2018, compared to 2017, with a taxable income of $200k he would have saved $6345. This is looking a 200k of taxable income with taxes of $41019 when applied to the 2017 tables and $34674 when applied to the 2018 tables. If his income was the same in 2017 compared to 2018 he would receive a tax cut in 2018 of $3608. Your "buddy" is lying his ass off. If he paid $10000 more in taxes he would have had to have substantially more income. If he is saying he had $2000 refund and this year owes $8000 then he didn't have the same withholding.

On top of the above, if he was a 1099 employee, not clear, he would also have been able to take advantage of the 20% pass through provision of the new bill...

Finally, yes, you are embarrassing yourself. Especially if you went from 1099 to W-2 and you were below the exemption for the pass through...

Grue the chiefsplanet guy who seems to be some kind of shill for higher taxes is taking issue with your tax story.

02-11-2019 , 05:09 PM

#149

Riverman

Carpal \'Tunnel

Join Date: Apr 2003 Posts: 73,135

Boy, that’s some terrible, terrible writing.

02-11-2019 , 05:16 PM

#150

hobbes9324

veteran

Join Date: Mar 2005 Posts: 2,872

Quote:

Originally Posted by Riverman

Boy, that’s some terrible, terrible writing.

You could be charitable and assume he was typing it out on a tiny phone keyboard, but it's more likely the result of a previous head injury, IMO.

MM MD

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