Reality Check: How much will YOUR income taxes go down (or up)?

Here’s a simple online  calculator that rudely awakened me.

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My son who admonished me to “stop calling it a tax cut until you run your numbers” … I finally did run my numbers.

For me — a discounted-rate college prof – my Federal income taxes will go up about 30%.

Whoa, Nelly.

What’s going on?

The key drivers: (1) loss of personal exemptions ($4,050 times 2)  (2) non-deductibility of state income taxes (Virginia has turned purple with a Dem governor) and (3) loss of 1/3 of my local real estate taxes (assuming the House version that still allows $10,000).

The alleged reduction in rates doesn’t offset those deductions lost.

Nuts.

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If you want to see what the likely impact will be on you, pull out the first couple of pages of your 2016 tax return so you can plug a few numbers into the CALCXML online tax calculator.

Here’s an example for a family of 4 – husband, wife, 2 kids under 18 … filing jointly … $150,000 combined income … no “unearned investment income” (dividends & capital gains which get taxed at a preferential rate) … $500,000 mortgage @ 4% …. $5,000 local real estate taxes .

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click for CalcXM’s online tax calculator

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And, the answer is …

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This family of 4 would pay just over $15,000 in Federal income taxes … about 10% of gross income … 12-1/4% of taxable income.

They can compare to there taxes paid in 2016 … to see if their taxes are going up or down … and develop their own point-of-view as to whether 10% (or 12-1/4%) is a “fair share” rate for them.

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click for CalcXM’s online tax calculator

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An important takeaway

I was initially bummed when I saw the answer … my income taxes are going to go up.

Then, I took a big step back and remembered: the stock market has been el fuego since Trump’s election … and most analysts forecast another big bump when the corporate tax cuts are finalized.

Translation: my 401-K accounts are looking much, much better these days … just in time for a June retirement.

As the original Grandma Homa used to oft say: The Lord giveth and the Lord taketh away.

In this case the Lord is giving more than she is taking away.

Whew!

And, her timing is awesome.
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#HomaFiles

Follow on Twitter @KenHoma            >> Latest Posts

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2 Responses to “Reality Check: How much will YOUR income taxes go down (or up)?”

  1. Mike Says:

    June retirement??? Say it ain’t so!

  2. John Says:

    Does Obama get the same credit for the 185% growth he created for you during his time, too?

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