2019-03-01 Money

MMARCHARCH 2019 2019 MMONEY.COMONEY.COM (^4545)
HOW TO
Estimate
Your
Ta x e s
Worried you’ve been
paying too much—
or too little?
It’s too late
to change your with-
holding for the 2018
tax year, but you’ll
want to get on the
right track as soon as
possible. The IRS on-
line income tax calcu-
lator, updated last
year to comply with
the Tax Cuts and Jobs
Act, is an especially
useful resource, ac-
cording to tax plan-
ners, since it makes it
easier to navigate the
latest rule changes.
One shortcoming,
however, is that it
won’t help you esti-
mate your state and
local taxes. That’s not
necessarily critical,
unless your state has,
like the federal gov-
ernment, also over-
hauled its tax laws for
this year. If you want
to be sure, Denver fi-
nancial advisor Jo-
seph Clemens recom-
mends TurboTax’s
free TaxCaster, which
enables you to esti-
mate your tax liability
to the federal govern-
ment and state.
MIDDLE-CLASS
COUPLE
MIDDLE-CLASS
FAMILY
HIGH-INCOME
FAMILY
ITEMIZER,
HIGH-TAX
STAT E
FREELANCER
FILING
STAT US
Married,
no kids
Married, two
kids: one child
age 13, one
child age 10
Married, two
kids: one child
age 17, one
child in college
Single Single
INCOME $ 70,000 $80,000 $150,000 $100,000 $50,000
TA X ES
UNDER
FORMER
LAW
$16,590 $16,368 $38,187 $30,166 $11,916
UNDER
TA X CU TS
AND
JOBS ACT
$15,407 $14,128 $38,066 $30,470 $10,154
BOTTOM
LINE
Ta xe s d e c re a s e
by $1,183
Ta xe s d e c re a s e
by $2,240
Ta xe s d e c re a s e
by $121
Ta xe s i n c re a s e
by $304
Ta xe s d e c re a s e
by $1,762
KEY
FACTORS
The increased
standard
deduction,
which rose to
$24,000 from
$13,000 for
couples, helps
this couple
save.
In addition to
the increased
standard
deduction, this
couple also
benefits from
the Child Tax
Credit, which
doubled to
$2,000 per
child.
These children
are too old for
their parents to
benefit from
the new $2,000
Child Tax
Credit, but they
are still able to
claim a sepa-
rate $500
credit for other
dependents.
We assumed
$16,000 in
state and local
taxes, not
unusual for
high-tax states.
The new
$10,000 cap on
state and local
tax deductions
means this
taxpayer will
see a tax
increase.
As a
freelancer,
this taxpayer
benefits
from both
the increased
standard
deduction
and the 20%
deduction for
pass-through
income.
SOURCE: Tax Policy Center’s Tax Cuts and Jobs Act tax calculator. Figures are for 2018 tax year.
RUNNING THE NUMBERS
How Will Your Taxes Change in 2019?
We used the Tax Policy Center’s tax calculator to see how five hypothetical families will
fare under the 2017 Tax Cuts and Jobs Act: