| Author |
Message |
Mack
Member
07-22-2002
| Wednesday, February 07, 2018 - 11:34 am 
Good question Karuuna. The offset they made was that they doubled the standard deduction. For instance, the standard deduction for tax year 2017 was $12,000 for a married couple. With our property tax, mortgage interest, and charity deductions we easily exceeded $12,000. Next year for tax year 2018 the standard deduction goes to $24,000 for a married couple. Now for us that’s about $1,500 more than we had in itemized deductions this year so looks like we’ll be taking the standard deduction and filing short form. In the end this actually may cost us more money. The folks that are going to get very well off the new standard deduction will be those who had very limited itemized deductions and had to take the old standard.
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Kookliebird
Member
08-04-2005
| Wednesday, February 07, 2018 - 12:01 pm
I agree with Mack. If you did not itemize, you will probably come out better. But, if you itemized in the past, it would depend on the makeup of the deductions. For me, I will pay more in federal taxes, as I will exceed the standard deduction for a single person but lose a good chunk of my 2017 property and state tax deduction in the process. My AGI will increase, but it is possible that I'll break even with the new rates. My gut feeling is that I will pay.
Regarding the 'big tax bill' with next year's return, I am also a bit curious, as well. Being that the Federal payroll tax deduction is dropping through the year, I wonder if people might end up paying next year if not enough is pulled out of the paycheck to cover the taxes due. I have not done that calculation yet because our company has not moved to the new tax tables yet.
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Mack
Member
07-22-2002
| Wednesday, February 07, 2018 - 12:23 pm
My concern is exactly as Kookliebird said and that’s if they are now withholding enough. Between my wife and I our monthly withholding went down around $300. So that’s $3,600 a year in our pocket that was going to Uncle Sam to hold. Now with the standard deduction we’re only going to get an additional $1,500 over our old itemized deductions. I realize tax math is complicated but my simple math tells me we’re going to have to probably pay next year. Maybe not the whole $3,000 but some. Not exactly earth shattering but something more. I try to run our withholding pretty close to what taxes we owe so that we don’t have to pay out a lot or let the government hold too much of our money either. As I said before the folks that are potentially going to get hammered will be those with high property taxes and state income tax like Kitt mentioned.
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Kookliebird
Member
08-04-2005
| Wednesday, February 07, 2018 - 2:12 pm
Yes. I will try to figure out the overall withholding on my paycheck, along with, a rough estimate of what taxes will be if my income is at the same level as this year. We are in a profit sharing period right now, which really skews things like taxes for me. The profit share money is a nice thing, but it usually bumps me into a different tax bracket (like it did this year, not much... but just enough to bump me). So, I have to do the calculations to see if I need to have payroll pull more $$ out for the feds. That's easier to live with on a week to week basis, rather than having to shell out money next year to pay the difference.
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Kitt
Member
09-05-2000
| Wednesday, February 07, 2018 - 4:34 pm
People who've optimised their withholdings over the years for their specific deductions are definitely going to see a change, and possibly will have underwithheld.
I haven't seen anything to say that the IRS are removing penalties for underpayment so I think some will have an unwelcome surprise come tax day 2019, not just with owing more, but when they get the underpayment bill a couple of months later.
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Mack
Member
07-22-2002
| Thursday, February 08, 2018 - 6:36 am
I’d forgotten about the underpayment penalty. Wife and I got hit with that almost 20 years ago. We got married in March and didn’t make any withholding changes for the remainder of the year. While it still exist the so called marriage penalty back then was even worse than today and we had a pretty big tax shortfall. That was bad enough but they added a penalty for underpayment. I can’t remember the last significant tax change, maybe there was something of this magnitude before under Reagan (????), so I’m guessing there’ll be some surprises come filing time next year.
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Karuuna
Board Administrator
08-30-2000
| Thursday, February 08, 2018 - 10:07 am
I don't know if it will hit too many.... Underpayment only applies if you owe more than 1000% $1000 (thanks, Mack!) and you are exempt if you paid at least 90% of what you owed.
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Mack
Member
07-22-2002
| Thursday, February 08, 2018 - 11:14 am
It’s $1,000 not 1,000% but in our case those years ago it was a few thousand, way more than $1,000, and we had not according to the formula paid 90%. The circumstances of our situation were I think unusual so I’d agree most would not be penalized just because of the adjustments in the new tax law. I hate to keep bringing it up but the one exception I can think of is somebody who is losing a substantial property and state income tax write off because of the new $10,000 limit. Georgia friend is a case in point. He estimates they’ll lose $15,000 in write off because of the $10,000 limit. At their 35% unadjusted tax bracket that translates into $5,250 additional tax. Of course there’s all the other write offs, calculations, etc., so without more details right now he’s just making a limited educated guess.
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Kookliebird
Member
08-04-2005
| Thursday, February 08, 2018 - 11:45 am
Well, I just calculated mine and it's not good. Using the 2017 AGI as the base, my rough calculations transfer to an estimate of $7k in additional taxes at the new rates, if all is equal to 2017. My tax rate will actually go up from what it is today.
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Karuuna
Board Administrator
08-30-2000
| Thursday, February 08, 2018 - 11:56 am
LOL, Mack, thanks. My bad.
It is really difficult to do the calculations. In my case, my taxes, etc are less than the $10,000 limit. I keep looking at the property taxes of others and it shocks me. I use to complain about my $2000/year, but no more!
I think the increased standard deduction will be much better for me. Won't change how I donate, etc. But it bothers me a lot for those not in my situation.
And I think people in some states most affected will be very upset come tax time, and in bad shape.
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Mack
Member
07-22-2002
| Thursday, February 08, 2018 - 2:51 pm
I’ll trade you Karuuna.....my property taxes are 4 1/2 times yours. Luckily due to my age mine are more or less frozen at their present level.
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Dipo
Member
04-23-2002
| Thursday, February 08, 2018 - 3:20 pm
I am lucky in Ca, that my property taxes are only $3600, and that is the new number that they have worked their way up to after losing so much value before.
Shocked me when I got my bill last November (oh and it is a condo).
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Karuuna
Board Administrator
08-30-2000
| Thursday, February 08, 2018 - 3:39 pm
No trade, Mack. 
Turns out Colorado is 41st in property tax rates. Lucky I landed here.
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Mack
Member
07-22-2002
| Thursday, February 08, 2018 - 4:01 pm
It’s kind of one of those pay me now or pay me later situations. When we lived in Virginia our property taxes were $3,600 for about the same value house but we paid state income tax that was more than twice our property tax. Moved to Texas and the income tax went away but the property tax more than doubled. End result though was for the same value house and same income our Texas property only tax bill was less than Virginia combined property and income tax by $2,000 a year. Of course we also have 8.25% sales tax here which is higher than Virginia’s 6.5%.
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Kookliebird
Member
08-04-2005
| Thursday, February 08, 2018 - 4:44 pm
My property taxes last year - $6,200 (Portland, Oregon) for a 982 sqft. condo.
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Mack
Member
07-22-2002
| Thursday, February 08, 2018 - 5:16 pm
Wow Kookliebird! Just wow! I thought mine at $9,000 was high but that’s for a 4,100 SF single family home on a 1/2 acre on a golf course with a private pool. Holy moly!
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Kitt
Member
09-05-2000
| Thursday, February 08, 2018 - 6:32 pm
$20,600 per year for a similar size house in the Bay Area, Mack, no pool, no golf course! It's a good job we (usually) have pleasant weather.
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Kookliebird
Member
08-04-2005
| Thursday, February 08, 2018 - 7:43 pm
Yup. Not good for my taxes. But, Kitt’s take the cake.
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Pamy
Member
01-01-2002
| Thursday, February 08, 2018 - 7:47 pm
actually CA prop taxes are lower than some states because we have prop 13. the reason many people have high tax bills here is because the property value is so high but...your base year value is still based on your last change in ownership/sale and then it goes up 2% yearly
so my home value in the real world is 400,000 but since we bought 18 yrs ago my taxable value is only about 223,000. AND CA has another bonus if you live in the property you own you get a homeowners exemption which takes 7000 off the value, so I am only taxed on a 216,000 value which translates to about 2400.00 year in property taxes for the 17/18 year
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Karuuna
Board Administrator
08-30-2000
| Thursday, February 08, 2018 - 9:02 pm
6000 square foot home, indoor pool (15 x 40), 5 acres and a barn.
Property taxes $2000. Come to Colorado. 
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Pamy
Member
01-01-2002
| Thursday, February 08, 2018 - 9:44 pm
great idea! Bill would move in a heartbeat!
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Kitt
Member
09-05-2000
| Thursday, February 08, 2018 - 10:19 pm
too chilly
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Seamonkey
Moderator
09-07-2000
| Thursday, February 08, 2018 - 10:42 pm
Heating bills...
What Pamy said goes for me.. I have been in this place over 20 years. Taxes are certainly a bit high but I bought when prices were bottomed out, condo, not SFR.
Still under $2500 taxes, older complex, so lots of large grass areas, huge trees, association look and tennis court, great location, 4 miles from the ocean.
Since I am not in the same space job wise, 0 income vs 2, I have been able to combine property tax, medical, charity nd itemize. For next year it is doubtful that will work, so I paid the second half of property tax before the end of 2017, to get more back when I file for 2017.
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Mack
Member
07-22-2002
| Friday, February 09, 2018 - 4:41 am
Well that’s an opposite wow Karuuna. I haven’t seen property taxes that low for almost any size house I’ve owned in 30 years in Washington, Virginia, and Texas and none of them came close to yours. I think I’d have to go back to 2,300 SF house in Tacoma, Washington that I lived in 1976 to 1980 to get that low. I think when I bought that house the annual property tax was $1,600 and around $1,900 when I quick deeded the house to my ex in 1980.
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Sadiesmom
Member
03-13-2002
| Friday, February 09, 2018 - 11:58 am
NJ 1/4 acre, 2 bedroom house - taxes 12500. but, we do have pretty good bus service here, 25% of the land is park land, there are all sorts of town things to do from senior bingo to free town bus, to summer band concerts to movie night a very active library with weekly lecture series and computer lessons for those who need it, all kind of free stuff for kids from summer camp to halloween trunk and treat at the police department. and lots and lots more. Not to mention strict zoning. I should know I spent 6 years in a law suit with neighbors to stop changing of zoning around the corner so that a parking lot would not be abutting my property. We won, still zoned triple A single family residential.
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