Taxes

The goal is to retain as much of your money throughout the year as possible and end up as close to a break-even come tax time. If I keep my money and I'm able to put it into a CD, certificate, IRA, 401, stocks, etc....then I'm able to see an annual return of somewhere between 5-18%. If the govt keeps my money for 12 months and then gives it back to me I've actually lost money at that point; losing money by way of lost returns/dividends and because the money hasn't even kept up with inflation. A large tax refund just means that your money sat in a bank for 12 months without accruing any interest.

This year was the closest I would have ever been to a break even, so the IRS got something right. In my case the increase of the child credit also made it the largest return I had ever received. I think a lot of individuals and small-business owners had gotten very good at playing games with the old tax code; time to shift tactics and adapt to a new set of rules. The easiest way to beat them is to match your withholdings to what your actual tax liability will be, then invest wisely.

It is a bummer that your company isn't passing the profits directly to the employees. But maybe they had failing infrastructure, an aging fleet, or had a couple rough years to make up for. Better to still be in business than no business at all.

 

My effective rate rate stayed the same but I have to write a large check, because our income jumped several thousand at the same time that withholding went down, and I didn't plan for it. People would really be well served to use the IRS withholding calculator at the beginning of every year. Would save lots of headaches.

The main focus of the legislation was really lowering the corporate rate to incentivize investment and job creation here instead of over seas. A lot of people looked at this as the second component to the individual tax reform under LBJ and Reagan where top rates made their wall all the way down from the 90% range. In a perfect world where the parties worked together to create a package of spending cuts and tax cuts they probably could have made room for more across the board spending cuts and tax cuts that everybody felt more up and down the income range. That's not how it is, so things had to be done through reconciliation on a party line vote, limiting what could be in the bill and how broad it could be. A lot of things had to be tweaked in one part of the bill to finance cuts elsewhere because there wasn't bipartisan support for comprehensive spending reform that would make across the board cuts easier.

I think the stats work out to about 80% of the public getting a cut. Then in that other 20% some break even and some in high tax blue states get screwed. Of course the media is focusing on refund size because they have a vested interest in making it look like everybody got screwed across the board.