April 15 is past

[bpgreen]

To clarify, I'm not talking about how much you owed or paid when you filed. I'm taking about total tax liability. Some people think they're paying more because they owed more at filling, but they ignore the fact that they got more money in each check.

In my case, income from non wage sources used to be offset by mortgage interest and SALT. That didn't happen this year so my taxes went up a bit.

[The_Professor]

Your poll doesn't have the "No F'n idea" option.
I work, money gets taken out, sometimes I get some back, sometimes I pay.

I think people should pay fair taxes and get fair deductions. I think it is fair that I have no idea how I have been F'd over.

[John Sand]

My father in law was complaining that his taxes went up because he paid a small amount and never had before. I asked him how much his pension check went up, and did the math. His taxes went down. I both got more in my check and a bigger refund. While my state and local taxes are high, (Yay! NY is #1) my income and property are modest enough that it didn't hurt me.

[RickBeer]

To clarify, I'm not talking about how much you owed or paid when you filed. I'm taking about total tax liability. Some people think they're paying more because they owed more at filling, but they ignore the fact that they got more money in each check.

In my case, income from non wage sources used to be offset by mortgage interest and SALT. That didn't happen this year so my taxes went up a bit.

The reality is that most people have no clue. They look at how much they owe on April 15th, or how much they got back, and that's what they base their answer on. Many didn't adjust their withholding when it was widely publicized last year, and won't adjust it this year, and then they'll complain next April. Many consider the April refund "found money", because they don't know any other way to budget.

Looking at what your total tax was last year is only a relevant comparison if all your numbers (income, deductions) that you can impact were the exact same. I put our info into TurboTax 2017 to get the exact answer. This took me 15 minutes, because you simply open both versions and work side by side, putting the 2018 numbers into the 2017 software.

Our total tax went down by 8% vs. the 2017 tax laws. Why? Because of the new small business deduction of 20% of income. That was the only saving grace. SALT kills us. Property taxes alone exceed the cap, so what we pay in income tax to the state or sales tax, is irrelevant. As a result, we lost the ability to itemize, because our mortgage is 3% and our interest is down from what it was 11 years ago when we took out the mortgage. If we were going to stay in our house for more than another 2 years or so (plan on selling and moving warmer for retirement), I'd have to consider whether to pay off the mortgage (rate will go up in 2 1/2 years and every year thereafter) because we've lost the tax benefit of having it. If the rate is 5% with no tax benefit, then it's less smart to keep it and invest in the market.

It's really sad how the majority of people pay so little attention to their finances. They don't understand their taxes, they don't understand their retirement options and the value of contributing to their 401K and/or tIRA/ROTH IRA. Just last month I explained to my son's 30 year old girlfriend why she should be contributing more to her 401K, because living in California her combined tax rate was roughly 35%. So for every $100 she put into her 401K, she was only reducing her take home pay by roughly $65. She stared at me, clearly not comprehending.

[brewnewb]

Disclosure Alert - I'm a non practicing CPA who left public accounting 20 years ago.

I agree with pretty much everything RickBeer said. I have 4 kids ranging from 23 - 28. They / their spouses are relatively clueless to taxes and finances but the reason may be that they just rely on my advice.

I compare using an "effective tax rate". Divide your tax liability (what you should have paid) by your taxable income (the taxed amount after all deductions / credits) and that equals your effective tax rate. Our tax liability was 15.87% of our 2018 taxable income VS 16.13% for 2017.

[Kealia]

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[John Sand]

Rick, well said.
Kealia

[teutonic terror]

I know, for myself, My bi monthly paycheck deductions are 38.5% of my base pay...
this includes taxes, insurance, union dues and 401k deductions...pretty spot on too.

This helps me figure finances and since my wife and I have actually gotten a handle on this,
It has really helped us start saving more money.