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Started By
Message
Question on the tax cut
Posted on 12/20/17 at 5:05 pm
Posted on 12/20/17 at 5:05 pm
Just had a friend post this. He's a big lib who hates Trump. Just wondering if his math is adding up.
"What was the old standard deduction approx 6k? So then someone single with two kids (3 personal exemptions at 4k each) thats 18k in deductions they would be getting under the old system. Now theu get 12k. So they are out 6k in deductions right there. Now there is an increase in the child tax credit, but not enough to cover the 6k lost so thry likrly have a tax increase. And thry werent itemizing to begin with"
"What was the old standard deduction approx 6k? So then someone single with two kids (3 personal exemptions at 4k each) thats 18k in deductions they would be getting under the old system. Now theu get 12k. So they are out 6k in deductions right there. Now there is an increase in the child tax credit, but not enough to cover the 6k lost so thry likrly have a tax increase. And thry werent itemizing to begin with"
7
Posted on 12/20/17 at 5:08 pm to thebigmuffaletta
They are losing 6K in deductions but getting 2K more in credits. So unless they are in a tax bracket above 33 percent... they are coming out ahead.
This post was edited on 12/20/17 at 5:09 pm
Posted on 12/20/17 at 5:09 pm to thebigmuffaletta
Send him this link
Have him plug that into the calculator - single w/ 3 dependents in LA or whatever state he's discussing.
Single w/ 2 dependents in LA making $40,000 is a tax savings of $1500 with the new bill.
To be clear, your friend is right, the taxable income for that single person will be higher under this bill. However, the tax credits are far more important as they're a direct credit against your tax liability.
Have him plug that into the calculator - single w/ 3 dependents in LA or whatever state he's discussing.
Single w/ 2 dependents in LA making $40,000 is a tax savings of $1500 with the new bill.
To be clear, your friend is right, the taxable income for that single person will be higher under this bill. However, the tax credits are far more important as they're a direct credit against your tax liability.
This post was edited on 12/20/17 at 5:11 pm
Posted on 12/20/17 at 5:10 pm to thebigmuffaletta
Your friend is an idiot
A credit is worth more than deduction
A credit is worth more than deduction
Posted on 12/20/17 at 5:11 pm to thebigmuffaletta
Depends on the income level of the single parent in this scenario, but with the lowered rates they could still have a net reduction in taxes. Would need that last bit of info to determine it though.
Posted on 12/20/17 at 5:14 pm to nickg0205
quote:
Depends on the income level of the single parent in this scenario, but with the lowered rates they could still have a net reduction in taxes. Would need that last bit of info to determine it though.
It depends on the state, but in Louisiana, there is literally no income level where this person would pay more in taxes under the new bill provided they were "never itemizing to begin with."
Posted on 12/20/17 at 5:17 pm to slackster
Ive already sent him the tax calculator link and he's still arguing they're going to pay more.
Posted on 12/20/17 at 5:30 pm to nickg0205
At what income level would they pay more?
Posted on 12/20/17 at 5:45 pm to thebigmuffaletta
Didn't think that scenario through all the way -- but no, don't there would be anywhere that you'd be pay more if itemization doesn't come into play.
Posted on 12/20/17 at 5:46 pm to thebigmuffaletta
quote:Tell him to check his check in Feb. Challenge him to subsequently do something novel . . . . . . to be honest.
Just had a friend post this. He's a big lib who hates Trump. Just wondering if his math is adding up.
"What was the old standard deduction approx 6k? So then someone single with two kids (3 personal exemptions at 4k each) thats 18k in deductions they would be getting under the old system. Now theu get 12k. So they are out 6k in deductions right there. Now there is an increase in the child tax credit, but not enough to cover the 6k lost so thry likrly have a tax increase. And thry werent itemizing to begin with"
Posted on 12/20/17 at 5:49 pm to thebigmuffaletta
It saddens me the amount of people who don't even know how our taxes work but still want to have a #hottaek about them. I'm sad that our populace is that uninformed and our tax system has gotten so complex. That said, the difference between a deduction and a credit is remedial level and everyone who pays taxes should understand it.
Posted on 12/20/17 at 5:51 pm to NC_Tigah
Newsflash - people are clueless abou taxes. Hell, people still think a raise could mean their take home pay is lower due if they move into a higher tax bracket. 
Posted on 12/20/17 at 6:02 pm to therick711
quote:
That said, the difference between a deduction and a credit is remedial level and everyone who pays taxes should understand it.
Eh, I think part of that is just from being used to having someone else / some computer software do taxes. You don't need to know if you're just given the answer. Also, as you mention, the complexity makes it a bit daunting for the novice to want to learn it.
Posted on 12/20/17 at 6:15 pm to slackster
quote:
a raise could mean their take home pay is lower due if they move into a higher tax bracke
That damn 130 percent tax bracket!
Posted on 12/20/17 at 7:00 pm to thebigmuffaletta
Standard deduction will be 18k for head of household I believe. Add in the increased tax credit and that person definitely has lower taxes.
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