Quote:
Originally Posted by Pete F.
There is a difference between tax rate and effective tax rate.
Wharton did a study and the effective rate was 20% and now is expected to be 9%
That's more than half.
"You never can answer the question" Is how I believe you typically put it with some identity politics thrown in.
Your taxes withheld or owed went down?
Have you done your taxes yet or are you surmising?
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"There is a difference between tax rate and effective tax rate."
agreed.
"Wharton did a study and the effective rate was 20% and now is expected to be 9%
That's more than half."
Yes it is. That Wharton said it, doesn't mean that's what's going to happen. I'm not an accountant, but I'm not sure how the effective tax rate would go down by larger percentage than the flat rate, not across the board.
If a company's net rate was 20% (when the gross rate was 35%), that means they have quite a bit of income not subject to the federal income tax (for example, maybe they have money invested in T-bills, on which interest earned is tax free). If that stays the same going forward, that income is still tax free, so would not decrease the effective tax rate. Not sure why, on average, companies would see a 55% decrease in effective tax rate, when the gross rate decreased by 40%, but I'm no CPA.
"Your taxes withheld or owed went down?
Have you done your taxes yet or are you surmising"
I thought I answered that is detail.
My taxes withheld went down, and my CPA says that my end-of-year taxes owed, will go down by the same amount. So the $200 a month bump I saw, will be ours to keep.
We qualify for that tax decrease, because of a decrease in tax rates as well as an increase in child tax credits.
Does that not answer your question? I think it answers it precisely as you asked.
I have not done my taxes yet (who has their W-2 already?). I asked a CPA what the end-of-year impact would be, of my decreased withholdings. I'll tell you for certain in March.
I am not assuming anything about taxes withheld, those went down by $200 a month. The payroll department wouldn't do that, if it meant I'd owe that much more at the end of the year. I didn't change my W-4.