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How Much Tax Did You Pay for 2018?
This question is different from knowing whether you got a refund or had to write an extra check. The answer isn’t even on the first page of the tax return. The answer is on Form 1040, Page 2. And for 2018, this form looks very different from 2017.
2018 Total Tax
The actual amount of Federal tax is hidden in plain sight on Line 15 of Page 2, after 14 other lines of numbers that go into the calculation. The calculations keep going from Line 16 to Line 23 to answer the question of whether enough was already paid to cover the tax and also to account for a few potential tax credits, but the Line 15 Total Tax is what most of us need to know when we are thinking about our personal finances and whether our taxes are going up or down.
Did your taxes go up?
To answer this question, look back to the 2017 Form 1040 Page 2 on Line 63. If 2017 was higher, then your taxes went down. If 2018 is higher, then taxes went up.
What about our refunds?
Since cash flow is often on our minds, we are acutely aware of whether we are getting a nice, juicy refund. Much has been written elsewhere about whether getting a big refund is financially beneficial or not compared to paying less in tax withholding, but for most taxpayers who are used to a certain refund each year, it feels better to see it go up, not down. So how do you interpret your 2018 refund?
Refund vs Total Tax
Go back to the total tax number. That’s really the answer to whether taxes went up or down. Refunds can vary a lot, and for 2018 the withholding system changed in a way that withheld less tax for many people, so that they had higher take home pay. The other side of this coin is that with lower withholding usually comes a lower refund. The refund info is on 2018 Page 2 Line 19 and 2017 Page 2 Line 75.