New Tax Plan Deductions
Moderator: Global Moderator
Re: New Tax Plan Deductions
THEY ROYALLY SCREWED DIVORCED PEOPLE. Maybe because divorce isn't Christian. But sexually assaulting under-age teens is A-OK.
From Schwab:
Numerous other deductions and tax credits repealed: The bill repeals deductions for tax preparation, moving expenses and alimony payments, among others.
From Schwab:
Numerous other deductions and tax credits repealed: The bill repeals deductions for tax preparation, moving expenses and alimony payments, among others.
Re: New Tax Plan Deductions
Why do we need a website? Wasn't it supposed to be calculable on a postcard?
Re: New Tax Plan Deductions
It's simplified in some ways, by getting rid of a stack of deductions, but new tweak-worthy elements were introduced. I bet the tax forms & schedules won't change much. Don't see postcards in anyone's tax future.
So here's a question: does anyone think that the businesses that you buy most of your stuff from (groceries, hardware store etc) will realize savings from the new tax system, AND that they'll pass these savings down to us? As in, will this make a real difference in cost of living?
So here's a question: does anyone think that the businesses that you buy most of your stuff from (groceries, hardware store etc) will realize savings from the new tax system, AND that they'll pass these savings down to us? As in, will this make a real difference in cost of living?
Re: New Tax Plan Deductions
Likewise, do you think employers are going to start paying their employees more because of the corporate and small business tax cuts? Maybe it will eventually lead to higher wages if employers start offering higher wages to attract good people but I can't see any employer immediately sharing their windfall with their existing employees. I read somewhere that lots of companies are already sitting on a lot of cash and if they were disposed to doing that they could have already done it.WiseOne wrote:It's simplified in some ways, by getting rid of a stack of deductions, but new tweak-worthy elements were introduced. I bet the tax forms & schedules won't change much. Don't see postcards in anyone's tax future.
So here's a question: does anyone think that the businesses that you buy most of your stuff from (groceries, hardware store etc) will realize savings from the new tax system, AND that they'll pass these savings down to us? As in, will this make a real difference in cost of living?
Re: New Tax Plan Deductions
Seems to me that the only "simplification" in store for most people is the elimination of the deductions that made it worthwhile to itemize. My guess is that most ordinary people will come to regret the loss of that complexity.
- Cortopassi
- Executive Member
- Posts: 3338
- Joined: Mon Feb 24, 2014 2:28 pm
- Location: https://www.jwst.nasa.gov/content/webbL ... sWebb.html
Re: New Tax Plan Deductions
Thank you. I would save 2367 with the new plan. But only because of getting the child tax credit. My net taxable income is 12k higher in the new plan. So I don't know how that will roll into other calculations like FAFSA.
And I Thanks that it was supposed to make things simpler, but I'd say it just shifts things around.
I would also add that I do charitable contributions partly to take the tax incentive, and partly to be a good person. That is now less attractive, and I would worry for charitable organizations.
Re: New Tax Plan Deductions
No 2017 to 2018 arbitrage on Federal taxes...the bill explicitly bars deductions in 2018 for any 2017 state and local taxes.
For what it's worth, the US did need to get corporate taxes in line with the rest of the world to be competitive in terms of retaining large multi-nationals in the states. By definition the slack is going to get picked up by something/someones. It is evident the special interests' lobbying efforts continue to be worth funding however...nothing simplified about this new tax bill. I personally like simplified tax systems. I live in a very red state with a flat income tax and minimal deductions. My taxes take as long as it takes me (literally) to click the next buttons in TurboTax. I wish we would go VAT, flat or progressive with zero deductions/exemptions. The tax code as it exists today is all about giving out bennys and punishing whatever strikes the latest folks in power as a good thing. It's corrupting on many levels.
For what it's worth, the US did need to get corporate taxes in line with the rest of the world to be competitive in terms of retaining large multi-nationals in the states. By definition the slack is going to get picked up by something/someones. It is evident the special interests' lobbying efforts continue to be worth funding however...nothing simplified about this new tax bill. I personally like simplified tax systems. I live in a very red state with a flat income tax and minimal deductions. My taxes take as long as it takes me (literally) to click the next buttons in TurboTax. I wish we would go VAT, flat or progressive with zero deductions/exemptions. The tax code as it exists today is all about giving out bennys and punishing whatever strikes the latest folks in power as a good thing. It's corrupting on many levels.
Re: New Tax Plan Deductions
A consumption tax... you'd have to handle tax-deferred money differently.
Imagine a regular IRA or 401k... not taxed initially... no tax until you consume. 1 tax event
Roth IRA or 401k... built with after tax money... taxed when you consume. 2 tax events
One additional layer of taxation for the Roth. You'd have to have an income tax for the regular IRA or 401k
Imagine a regular IRA or 401k... not taxed initially... no tax until you consume. 1 tax event
Roth IRA or 401k... built with after tax money... taxed when you consume. 2 tax events
One additional layer of taxation for the Roth. You'd have to have an income tax for the regular IRA or 401k
-
- Executive Member
- Posts: 5994
- Joined: Wed Dec 31, 1969 6:00 pm
Re: New Tax Plan Deductions
I'm not sure that actually screws divorced people to the extent you suggest, since the current rule is that the payer can deduct alimony but the recipient has to pay taxes on it. Perhaps the new law says that the payer can't deduct it but the recipient doesn't have to pay taxes on it. This is how child support works at present, I believe.ochotona wrote:THEY ROYALLY SCREWED DIVORCED PEOPLE. Maybe because divorce isn't Christian. But sexually assaulting under-age teens is A-OK.
From Schwab:
Numerous other deductions and tax credits repealed: The bill repeals deductions for tax preparation, moving expenses and alimony payments, among others.
Yes, that seems to be what they are doing, at least according to this article: https://www.cnbc.com/2017/11/03/tax-ref ... ouses.html
Re: New Tax Plan Deductions
This already happens, as many states have sales taxes. And don't forget the FICA taxes that applied on the front end in both cases.ochotona wrote:A consumption tax... you'd have to handle tax-deferred money differently.
Imagine a regular IRA or 401k... not taxed initially... no tax until you consume. 1 tax event
Roth IRA or 401k... built with after tax money... taxed when you consume. 2 tax events
One additional layer of taxation for the Roth. You'd have to have an income tax for the regular IRA or 401k
It is true that implementing a consumption-based tax system would reduce the benefits of tax deferral, and would also be hard hitting for any kind of after-tax savings including a Roth. It may well be worthwhile to shift some of the income tax burden to consumption taxes, but you'd have to do it slowly and also find a way to make it work for people on the low end of the income scale. The FAIR tax idea of a tax credit that goes out to everybody (aka a citizen's dividend) is one way to accomplish that.
Maybe starting a transition by putting in place a national sales tax and citizen's dividend? This could be zero sum initially, or as it should provide immediate benefit to the low end of the income scale since they buy less stuff, could take over the role of some current welfare programs and their budget as well. Of course, we can't do this before fixing the broken immigration system, which ends up prioritizing people at the low end of the income scale i.e. exactly the opposite of what we should be doing.
Re: New Tax Plan Deductions
That could really upset the balance of things, if there isn't grandfathering for divorce agreements already in place.Libertarian666 wrote:I'm not sure that actually screws divorced people to the extent you suggest, since the current rule is that the payer can deduct alimony but the recipient has to pay taxes on it. Perhaps the new law says that the payer can't deduct it but the recipient doesn't have to pay taxes on it. This is how child support works at present, I believe.ochotona wrote:THEY ROYALLY SCREWED DIVORCED PEOPLE. Maybe because divorce isn't Christian. But sexually assaulting under-age teens is A-OK.
From Schwab:
Numerous other deductions and tax credits repealed: The bill repeals deductions for tax preparation, moving expenses and alimony payments, among others.
Yes, that seems to be what they are doing, at least according to this article: https://www.cnbc.com/2017/11/03/tax-ref ... ouses.html
Re: New Tax Plan Deductions
Michael Kitces says you can't backup and recharacterize Roth IRAs now.
-
- Executive Member
- Posts: 5994
- Joined: Wed Dec 31, 1969 6:00 pm
Re: New Tax Plan Deductions
I think that was included.Xan wrote:That could really upset the balance of things, if there isn't grandfathering for divorce agreements already in place.Libertarian666 wrote:I'm not sure that actually screws divorced people to the extent you suggest, since the current rule is that the payer can deduct alimony but the recipient has to pay taxes on it. Perhaps the new law says that the payer can't deduct it but the recipient doesn't have to pay taxes on it. This is how child support works at present, I believe.ochotona wrote:THEY ROYALLY SCREWED DIVORCED PEOPLE. Maybe because divorce isn't Christian. But sexually assaulting under-age teens is A-OK.
From Schwab:
Numerous other deductions and tax credits repealed: The bill repeals deductions for tax preparation, moving expenses and alimony payments, among others.
Yes, that seems to be what they are doing, at least according to this article: https://www.cnbc.com/2017/11/03/tax-ref ... ouses.html
Re: New Tax Plan Deductions
Has anybody figured out what the current plan does for pass-through businesses?
Based on what I've been able to figure out: If you own an LLC/sole proprietorship/any business other than a corporation taxed at ordinary income rates, you get to deduct 20% of business income, UNLESS your business is service based and does not own property or have employees, AND the owner's income is greater than $157K (single) or $315K (MFJ). This applies also to income from an REIT.
I get confused with that service etc exemption, because nothing I've read is very clear on the subject. The only thing I know for sure is that an enormous set of tax loopholes has just been created, that Bob Corker and Trump are dancing with joy right about now, and that the stampede of high income earners forming new corporations is going to be deafening. It would be nice for us small fry to figure out if we can partake of the coming largesse as well.
Based on what I've been able to figure out: If you own an LLC/sole proprietorship/any business other than a corporation taxed at ordinary income rates, you get to deduct 20% of business income, UNLESS your business is service based and does not own property or have employees, AND the owner's income is greater than $157K (single) or $315K (MFJ). This applies also to income from an REIT.
I get confused with that service etc exemption, because nothing I've read is very clear on the subject. The only thing I know for sure is that an enormous set of tax loopholes has just been created, that Bob Corker and Trump are dancing with joy right about now, and that the stampede of high income earners forming new corporations is going to be deafening. It would be nice for us small fry to figure out if we can partake of the coming largesse as well.
-
- Executive Member
- Posts: 5994
- Joined: Wed Dec 31, 1969 6:00 pm
Re: New Tax Plan Deductions
The word is "misandry".MangoMan wrote:Tech, I'm surprised you didn't point out the obvious misandriousness [is that even a word?] of this. It generally screws men [who are almost always the payers of the alimony] to the benefit of women [the usual recipients]. If you single guys were looking for yet another reason not to involve the state in your marriage, here you go.Libertarian666 wrote:I think that was included.Xan wrote:
That could really upset the balance of things, if there isn't grandfathering for divorce agreements already in place.
And actually I'm happily married... but if I were a young man, I would emigrate to a less misandrous country, knowing what I know now.
Re: New Tax Plan Deductions
With the old tax system i would have started itemizing because i just bought a house and give to charity each year (almost entirely to the church). Now itemizing with the standard deduction so high only would make some of those charitable contributions into actual dollars that reduce my overall taxes.
My goal is to now donate through my father (legally). I gift him money and he donates into a charitable fund to be released throughout the year. You can take the tax deduction now and distribute it later (even a year later). I claim his higher tax bracket and through us pooling our charitable giving, it makes almost all of it reduce overall tax burden. I then end up filing a standard deduction and my father files itemized with our pooled charitable giving (can even do multiple years of giving in one year and have it distributed over multiple years). My father would then shift off every other year of filing itemized (if we're pooling charitable giving), or standard.
More complicated than it had to be but there is always a way to be smart about taxes. I just was hoping tax reform wasn't going to make things harder hah.
My goal is to now donate through my father (legally). I gift him money and he donates into a charitable fund to be released throughout the year. You can take the tax deduction now and distribute it later (even a year later). I claim his higher tax bracket and through us pooling our charitable giving, it makes almost all of it reduce overall tax burden. I then end up filing a standard deduction and my father files itemized with our pooled charitable giving (can even do multiple years of giving in one year and have it distributed over multiple years). My father would then shift off every other year of filing itemized (if we're pooling charitable giving), or standard.
More complicated than it had to be but there is always a way to be smart about taxes. I just was hoping tax reform wasn't going to make things harder hah.
-
- Executive Member
- Posts: 751
- Joined: Mon Oct 01, 2012 7:32 pm
Re: New Tax Plan Deductions
What a mess for charitable donations. It would be better to just not allow deductions for charitable donations at all and lower the tax rate some if they can.
Personally I don't care about the deduction but you feel like you have to jump through the tax hoops if it is available. Maybe I am wrong but ultimately I don't believe anyone makes a charitable donation because of a tax deduction.
Personally I don't care about the deduction but you feel like you have to jump through the tax hoops if it is available. Maybe I am wrong but ultimately I don't believe anyone makes a charitable donation because of a tax deduction.
Re: New Tax Plan Deductions
I'm sure that many people who intend to make significant charitable donations are inclined to at least look at the timing of donations at this time of the year. For example, if one is going to donate $1,000 to a charity and it's already December, it's likely that person will make a rough calculation as to whether it's more beneficial in tax terms to pull the trigger right away or wait until after January 1st. But I am one of the world's shallowest humans so maybe it's just me who thinks this way.whatchamacallit wrote:Maybe I am wrong but ultimately I don't believe anyone makes a charitable donation because of a tax deduction.
Re: New Tax Plan Deductions
I agree with you. I think most donating to charity would look for the way that helps them from a tax way the best. That way it "costs less" to donate a set amount, or it allows you to donate more than what you would have normally due to the tax savings. Either way.barrett wrote:I'm sure that many people who intend to make significant charitable donations are inclined to at least look at the timing of donations at this time of the year. For example, if one is going to donate $1,000 to a charity and it's already December, it's likely that person will make a rough calculation as to whether it's more beneficial in tax terms to pull the trigger right away or wait until after January 1st. But I am one of the world's shallowest humans so maybe it's just me who thinks this way.whatchamacallit wrote:Maybe I am wrong but ultimately I don't believe anyone makes a charitable donation because of a tax deduction.
- Cortopassi
- Executive Member
- Posts: 3338
- Joined: Mon Feb 24, 2014 2:28 pm
- Location: https://www.jwst.nasa.gov/content/webbL ... sWebb.html
Re: New Tax Plan Deductions
I made the family go through closets the past few days and we donated a bunch, to get it into this year. I like donating, I like getting rid of stuff, and certainly the deduction helps. Next year it is likely I will have a huge dropoff in the stuff I donate, vs. say, trying to sell.Greg wrote:I agree with you. I think most donating to charity would look for the way that helps them from a tax way the best. That way it "costs less" to donate a set amount, or it allows you to donate more than what you would have normally due to the tax savings. Either way.barrett wrote:I'm sure that many people who intend to make significant charitable donations are inclined to at least look at the timing of donations at this time of the year. For example, if one is going to donate $1,000 to a charity and it's already December, it's likely that person will make a rough calculation as to whether it's more beneficial in tax terms to pull the trigger right away or wait until after January 1st. But I am one of the world's shallowest humans so maybe it's just me who thinks this way.whatchamacallit wrote:Maybe I am wrong but ultimately I don't believe anyone makes a charitable donation because of a tax deduction.
Re: New Tax Plan Deductions
Looks like I was wrong about employers immediately passing the tax cut benefits on to their employees. At least some of them are....
http://www.nationalreview.com/corner/45 ... investment
http://www.nationalreview.com/corner/45 ... investment
Re: New Tax Plan Deductions
I dug deep and gave my 2018 church contribution this month. Last time I'll be able to itemize it.