Thank you, Cindy, for reminding me that it was possible to have your employer withhold extra money. I had to pay tax this year and TurboTax wanted me to fill out and send in quarterly estimated payments for this year. As if I'd ever remember to do that. Much easier to have my employer withhold the monthly equivalent.

Hi, bennett! I'm sorry you had to pay. They really did us dirty with the withholding games.

Dh has to up his withholding again. Our tax guy said to change it from "married" to "single," which I think he's going to do, but we're going to withhold a little more too, just in case.

The thing I'm against in principle: If you make enough money each year, you max out your FICA withholding. This is regressive, but is what saved our asses.

The right is always bitching about how Social Security is going to be the ruination of this country, but in part, that's because the fix is in -- as I'm sure everyone here understands, but I just need to vent -- the more money you make, the more the fix favors you.

In 2018, every worker from part-time waitress to Warren Buffet*, paid 6.2% via the FICA deduction toward Social Security old age, survivor, and disability benefits.

BUT*...

There's a cap -- a maximum you have to pay.

For 2018, it was just under $8,000.00. So, if you make:

$35,000.00, you must pay the whole 6.2%, or $2,170.00

$50,000.00, you must pay the whole 6.2%, or $3,100.00

$100,000.00, you must pay the whole 6.2%, or $6,200.00

$128,400.00, you must pay the whole 6.2% or $7,960.80

$7,960.80 is the maximum.

So, if you make:

$200,000.00, you still pay only $7,960.80

$500,000.00, you still pay only $7,960.80

$10,000,000.00, you still pay only $7,960.80

$GAZILLION.00, you still pay only $7,960.80

Plus, we're from one of those places with high state and local taxes (SALT). We get what we pay for. Our state's schools are routinely #1. We have Romney Care, etc.

There's now a cap for SALT, and it's (proportionally) low for states which provide a lot of services; aren't "taker states"; have higher cost of living, including real estate values (and therefore higher property and other taxes, which fund our services), etc.

In addition to futching with the withholding amounts, this is what truly screwed us. Aside from tax rates themselves, our home is more expensive, not because it is great, but because it is here, and "here" is great.

Our SALT are high, but the newly instituted cap is $10,000.00, so there's suddenly a good chunk of money we pay out in taxes, which we cannot write off.

Just remember that the same people who don't think their kids should have to pay an inheritance tax, because it is double taxation, are just fine with taxing regular families on monies they've worked for but already paid out in taxes.

Next time, I'll keep the receipt from my private jet.

I'm having quietly helpless panic because the last two years I tried to use TurboTax and my return got bounced back (I think because of the way my name is filed with Soc Sec). So I used TaxAct this year, weeks and weeks ago ... and it never came back. I'm assuming that means they actually got filed, but I wish there was some kind of confirmation email or something. * And when I say bounced back, it just meant I had to print it and sign it and send it snail mail.

Signed,

Hates and Fears Tax Season (because I don't know what I'm doing)

I did my taxes over the weekend. It was -- not pretty. I also got hit on the SALT cap. Plus being married filing separately didn't help.

We were not hit quite as much as usual, because husband was unemployed for more than half of the year. If everything had remained the same as last year (which also involved some months of him being unemployed), our bill would have gone up by thousands of dollars, I think.

We sent our tax stuff to an accountant and wrote her (and by proxy the IRS and state of NY) a check. We more or less came out even on paying the feds / getting a refund from the state, which is better than we did last year by a whole bunch.

Freelance artists/performers are realizing that much of what they used to deduct is no longer deductible. If I were still getting 1099s from 10-20 different theatres I'd be hurting right now.

I work for myself, aurelia, so although dh and I file jointly, my taxes are filed on a schedule C form. I'm still taxed at a higher rate, because I'm self-employed, but I also still wrote off the same things. What changed there?

We more or less came out even on paying the feds / getting a refund from the state, which is better than we did last year by a whole bunch.

We got a bigger than usual refund from our state too, Jessica, but it wouldn't have been enough, if dh hadn't overpaid FICA.

We were not hit quite as much as usual, because husband was unemployed for more than half of the year. If everything had remained the same as last year (which also involved some months of him being unemployed), our bill would have gone up by thousands of dollars, I think.

Ugh, Dana. I mean, I'm glad you weren't hit with an increase, but it sucks that your taxes basically held steady in a year of significant unemployment. That's just broken.

Hates and Fears Tax Season (because I don't know what I'm doing)

Yup. It's not just you (or your relative knowledge, Amy). It's also way less predictable than it ought to be.

I still can't get past the fact that if I am claiming zero allowances (that is, I'm saying, "Please do not reduce my withholding,") and then am having them withhold extra besides that, that I still would have had to pay an additional $5K when I file.

That's just crazy. If the government says to me, "We're gonna withhold some of your pay, so that when we bill you for taxes, you will have already been paying toward it, so how many allowances would you like us to make for you?" and I say, "Zero. Make zero allowances for me," that should at least mean I don't owe the government any money.

We don't know what to expect for next year's taxes (i.e. taxes on our 2019 income), because our 2018 income was way more than we made in 2017 or will make in 2019.

Ok, I was wrong about the 1099 part. It looks like Schedule A is where the impact is (and the elimination of Form 2106). [link]

Actors, Directors and Performers

The major change in the new tax bill is the elimination of the deduction for employee business expenses (Form 2106). This is going to have a devastating effect for many employed performers as Actors Equity, SAG-AFTRA and other organizations require that compensation be paid on a W-2. As of 2018, these performers lose all ability to take their professional, out of pocket expenses.

As most of you know the QPA (Qualifying Performing Artists) is, and has been, virtually worthless for many years as the qualifying threshold is unrealistically low. This has traditionally moved the deductions for the professional actor, actress, model and performer to Schedule A as miscellaneous itemized deductions, and these are what the new tax bill eliminates.

In planning for this change the performer has 2 options;

The simplest approach is asking the payor to lower compensation and reimburse the out of pocket expenses or Set up what is called a "loan out" corporation. The concept of a loan out corporation is that the buyer of the talent pays the artist's company instead of the performer directly. The performer then becomes an employee of their own corporation and takes all the associated deductions 100% directly on the corporate tax return. In that way, the performer gets the full value of all the associated business expenses, including the new 199A "business income deduction" if qualified, as well as obtaining the liability protection that the corporation gives them. In exchange for this, of course, the performer complicates their life substantially with the administrative hassles of the corporation so one must carefully weigh out the pros and cons before jumping in.

Remember actors and other performers are considered "specified service businesses" under Section 199A.

Musicians and Singers

One of the key changes in the new tax bill is the elimination of the deduction for employee business expenses. While many successful musicians receive W2 income from touring gigs, they generally also have substantial income from self-employment for teaching, session work or private gigs. There has been no significant change in deductions for self-employed taxpayers; Schedule C stays virtually untouched. All direct business expenses for the musicians' independent, free-lance (1099) work will keep all allowable deductions intact moving into 2018. Again, in 2018 the one change will be the inability to deduct expenses directly associated with W2 employment. In this case, the touring musician with significant out of pocket expenses related to W2 income would be better to receive lower compensation and have the touring company reimburse them their expenses.

Remember musicians, singers and other performers are considered "specified service businesses" under Section 199A.

Writers

In our opinion, writers will see little or no change in the deductibility of their direct writing expenses. A vast majority of independent writers are considered self-employed (remember, writer royalties are considered earned/self-employment income for the creator) and there has been no significant change in deductions for self-employed taxpayers; Schedule C stays virtually untouched. Current regulations indicate that writers (those not connected with the performing arts) will also enjoy the full benefit of the new 199A net income deduction under 2017 TCJA tax bill.

Many independent writers also teach. Their teaching income is reported on form W2 and, therefore, the deductions associated with the W2 income will be lost in 2018 but not their direct expenses for writing and research.

Remember writers that are not "integral to the creation of the performing arts" are not considered "specified service businesses" under Section 199A. If you have substantial income as a writer consider structuring your writing business as an "loan out" S corporation and (continued...)

( continues...) paying yourself payroll to leverage the new 199A deduction.

Visual Artists

In our opinion, visual artists will see little or no change in the deductibility of their direct art expenses. A clear majority of independent artists are considered self-employed (remember, an artist's income is considered earned/self-employment income for the creator) and there has been no significant change in deductions for self-employed visual artists; Schedule C stays virtually untouched. Current regulations indicate that visual artists not connected with the performing arts will also enjoy the full benefit of the new 199A net income deduction under 2017 TCJA tax bill.

Many independent visual artists also teach. If their teaching income is reported on form W2 then those teaching deductions, formally taken on Form 2106 as itemized deductions will be lost in 2018.

Remember, visual artists that are not creating art work "integral to the creation of the performing arts" are not considered "specified service businesses" under Section 199A. If you have substantial income as a visual artist, consider structuring your art business as an "loan out" S corporation and paying yourself payroll to leverage the new 199A deduction.