Because I had been reading so many stories about refunds v. owning money as a result of the new tax changes, I decided to do our taxes two ways: using last year's tax code and this year's because everything else could be a result of withholding/different earnings/other factors.
This was easy to do, because I do my own taxes and I use Turbo Tax. I just opened a new file in last year's program and entered the info side by side with this year's program.
My dad said he had been planning to do the same thing: like father like daughter! My dad is 86 and still does his own taxes. The first time I did mine, he sat patiently with me as I did my (then) very simple return.
Ok, so this year we are getting back $4475 more than we would have under the old tax code. That is insane (and not in a good way, except for us it's good, but not for the country).
This is the part of the post where things get nerdy. But this is SavingAdvice, so you're probably into this! This is why I think the difference is so much in our favor:
- Standard deduction - we always took the standard deduction so the difference is pretty dramatic for us (we never itemized)
- Child tax credit - this gained us $2000 (would have been 0 under the old tax code)
- I made some pass-through money (my business profit which is taxed as personal income, and under the new rules, 20% of that is just written off
- I guess we end up in a lower tax bracket because they changed the brackets (we would have been in the 28% tax bracket last year, and now the same income is 24%)
All of this is great for us, as I mentioned, but completely unfair. Of course we can use the money (D may have to go back to the UK, but that's a different post and we are saving for college) but we shouldn't have been the ones to get a tax break. We make a good living (with both of our salaries about 120k) and I feel like this should have been aimed more at people less fortunate. Besides giving to college, some of this refund will be given as a charitable donation (along with the money F raised by making friendship bracelets for a local non-profit that deals with domestic violence).
Taxes - Two Ways
February 9th, 2019 at 09:42 pm
February 10th, 2019 at 01:11 am 1549761104
A lot of benefit comes from the lower (and expanded) brackets, plus for people who have children, the Child Tax Credit gives back some of the benefit that the loss of personal exemptions took away.
February 10th, 2019 at 08:34 pm 1549830885
February 10th, 2019 at 11:49 pm 1549842540
I'm saving $20k possibly more.
February 11th, 2019 at 12:45 am 1549845936