Indeed and it will be frustrating to watch the spin that a tax cut was bad because people got less of a refund even though they paid less tax overall.
I still dont like the bill but not because refunds decreased.
Tax update
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Indeed and it will be frustrating to watch the spin that a tax cut was bad because people got less of a refund even though they paid less tax overall.
I still dont like the bill but not because refunds decreased.
That spin is going on right now on all the major stations. They fail to mention that their withholding was adjusted and paid less taxes during the year but I've seen the silly spin on two of the big three stations multiple times that people are upset because their refunds are lower. Does anyone understand how you get paid ugh!!!
Even before the tax changes, we had friends of friends who were getting a $5000+ refund check, was talking to the guy and telling him I had to pay $3,000+ or something and he thought it was so bad, tried explaining to him I would rather have "my money" every week than have the government "hold it for me" over 15 months, but he would have none of it.
Logically, as long as you're not required to pay estimated taxes during the year and you plan accordingly, getting a free loan from the government is ideal. but a lot of people use that as forced savings which isn't necessarily bad either.
Your effective tax rate will change year-to-year independent of any tax law change. Said another way, if the law remained exactly the same you will still have a change in your effective tax rate in any given year.
if you want to determine what the tax law did to your effective tax rate then you have to run this year's tax situation through last year's tax laws.
That is the only way to determine the effect of the law on your rate.
if you have a tax accountant you could ask them to run it through the software. If you use TurboTax or something like that you can do it yourself.
if you want to determine what the tax law did to your effective tax rate then you have to run this year's tax situation through last year's tax laws.
That is the only way to determine the effect of the law on your rate.
if you have a tax accountant you could ask them to run it through the software. If you use TurboTax or something like that you can do it yourself.
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You don't necessarily need to run it through if your taxes are not complex and primarily W-2 wages.
It's fairly easy if you know your AGI and total taxes for each year.
If you earned more this year, take your change in AGI and multiply it by your top marginal rate in 2017. Add that to your 2017 taxes and recalculate your effective interest rate and compare to 2018.
Doesn't need to be exact but will give you a decent benchmark to see how the law impacted you. It should decrease for most people, though there are some scenarios where it will be up in 2018 especially in a state like NJ and worse if you have dependents over 16.
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