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when you boil it down the eitc credit is pretty much a form of welfare payment . it really is not a refund of income taxes since you did not pay in as much . it is a gift from the tax gods
Sorta true, but keep in mind, one has to have earned income to receive the EITC.
It is designed to act as an incentive to those who might otherwise do nothing and be an even bigger drag on taxpayers.
Well let’s be clear my SALT have been at a fairly similar level for years so it was the tax law change that created said limit so prior to the 2018 tax year I didn’t max out the deduction. A prior poster didn’t understand how people could have been negatively impacted so I figured it was worth pointing out
I have zero desire to sell, move or downsize. But to suggest I do that to possibly save money on taxes is a bit shortsighted as the typical cost to sell a house and close on the transaction would cost upwards of 50k so not only would I downgrade my quality of life but also pay a lot to do it. I’m good paying the taxes
I get how a high earner in CA for example could owe more in Federal income taxes. Admittedly I still don't get the TX thing. If you're paying over 10k in property tax + sales tax on non-groceries then you must make a pretty decent income. However Trump lowered tax rates for higher earners, particularly those who were near the edges of some of the brackets.
A couple who was making 160k, for example, went from a marginal rate of 28% to 22%.
I get how a high earner in CA for example could owe more in Federal income taxes. Admittedly I still don't get the TX thing. If you're paying over 10k in property tax + sales tax on non-groceries then you must make a pretty decent income. However Trump lowered tax rates for higher earners, particularly those who were near the edges of some of the brackets.
A couple who was making 160k, for example, went from a marginal rate of 28% to 22%.
Just curious. Do you understand how marginal rates work?
I get how a high earner in CA for example could owe more in Federal income taxes. Admittedly I still don't get the TX thing. If you're paying over 10k in property tax + sales tax on non-groceries then you must make a pretty decent income. However Trump lowered tax rates for higher earners, particularly those who were near the edges of some of the brackets.
A couple who was making 160k, for example, went from a marginal rate of 28% to 22%.
these are the taxable brackets after deductions . plus all the money is not taxed at the highest level , it is bracketed . only the top hits the highest brackets not all the income. each step of the way up gets taxed lower until you get to the top .
so a couple with 77,401 in taxable income and 101,401 pre tax gets 1 dollar taxed at 22% , 58,350 at 12% and 19050 at 10%
I get how a high earner in CA for example could owe more in Federal income taxes. Admittedly I still don't get the TX thing. If you're paying over 10k in property tax + sales tax on non-groceries then you must make a pretty decent income. However Trump lowered tax rates for higher earners, particularly those who were near the edges of some of the brackets.
A couple who was making 160k, for example, went from a marginal rate of 28% to 22%.
You couldn’t fathom how someone would be worse off and I pointed out how with the SALT limitations. You don’t have to understand my specific scenario or those in Texas but it is feasible that the limitations cost some tax payers more than they’d pick up in the tax bracket deltas
these are the taxable brackets after deductions . plus all the money is not taxed at the highest level , it is bracketed . only the top hits the highest brackets not all the income. each step of the way up gets taxed lower until you get to the top .
so a couple with 77,401 in taxable income and 101,401 pre tax gets 1 dollar taxed at 22% , 58,350 at 12% and 19050 at 10%
Exactly, that's why I stated marginal. That $58,350 getting taxed at 12% instead of the prior 15% saves them $1,750.50.
when you boil it down the eitc credit is pretty much a form of welfare payment . it really is not a refund of income taxes since you did not pay in as much . it is a gift from the tax gods
True. It's been around since before I was born (I didn't realize it was that long-lived until I googled it), but my understanding is that it was sold as somehow being more sensible than having poor people pay taxes, only to turn around and give them money (welfare). So it almost seemed like a welfare "cut", or at least not a direct handout.
Ironically, now (especially in recent years), its beneficiaries are chided for not paying any taxes. So it ultimately doesn't really matter how you structure it (taxes + welfare, or no taxes and smaller welfare in form of tax "refund"), the recipients still get demonized.
On the original topic... this might be asking too much, but do your taxes by hand (spreadsheet, whatever) and do a line by line compare of where the differences are (start with the total liability and total paid lines). It should match what came out of the software. Yes, it's tedious, but it's probably not truly difficult. As nice as tax software is, a lot of people blindly depend on it to the point of not really understanding what all the drivers are and how much in taxes they really are paying on a net basis every year (and what changes they can make to impact those values).
On the original topic... this might be asking too much, but do your taxes by hand (spreadsheet, whatever) and do a line by line compare of where the differences are (start with the total liability and total paid lines). It should match what came out of the software. Yes, it's tedious, but it's probably not truly difficult. As nice as tax software is, a lot of people blindly depend on it to the point of not really understanding what all the drivers are and how much in taxes they really are paying on a net basis every year (and what changes they can make to impact those values).
That's how I do my taxes. Spreadsheet and then file with FreeFillableForms which is the most primitive web interface on the planet. I maintain a cocktail napkin version all year to make sure I'm not under or over-withholding.
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