As a disclaimer, I’m not an accountant, and I’m merely talking about my understanding of tax law. I’m subjecting this to the entire world to tell me if I’m wrong or right about it. Do your own research or talk to a CPA for your situation.
I’m in the process of projecting my company’s earnings for 2018. Just like bigger corporations do, I am setting a target and going to do my best to hit that target.
Then I get to projecting my personal net income after taxes. Wow taxes are complicated. I spend a significant amount of time on Sunday going through tax law, creating a spreadsheet so I could project what my income looks like. I also crunched the number of what “Trump Tax” would look like. The numbers are quite surprising.
Starting at ~45K it looks as if federal taxes are going to be more for a married couple with 2 kids. So far Trump Tax has boasted double standard deductions but what it doesn’t boast is that it gets rid of personal exemptions.
Consider the following math for a married couple with two kids.
Standard deductions:
2018 projected: $13,000
Trump projected: $24,000
Exemptions:
2018 projected: 16,600 ($4,150 * 4)
Trump projected: 0
Lets do the math:
2018: 13000 + 16600 = 29600
Trump: 24000 + 0 = 24000
Plus in certain states Trump tax makes it so that you can’t deduct local taxes from your federal tax bill. One redeeming factor is that child credit is subject to change, but it would have to go up quite a bit to make up for that difference.
All that said, projecting is kind of fun is a sick way. Planning for how much I’ll owe the government or how long I could survive without work seems to be very necessary.