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re: Tax Reform Discussion ThreadPosted by TigerDeBaiter on 11/3/17 at 7:15 am to RedStickBR
quote:
My understanding is that the only cohort to be worse off would be (a) those making between $150k and $350k who (b) itemize their deductions.
The upper middle class, as usual takes it in the fricking arse. It’s always the responsible hard working people that get shafted. Why should I pay any more under this supposed “tax reform”?
Not a fan.
re: Tax Reform Discussion ThreadPosted by SLafourche07 on 11/3/17 at 7:18 am to Volvagia
quote:
I hate to sound over the top political, but IMO the biggest hits will be to middle class families who want to have more than a kid or two.
I disagree. The increase in the child tax credit (which there is a push to increase even more than what was proposed) plus the lower rates mostly, if not more than, makes up the loss of personal exemptions.
If your married and your AGI is under $90k then the increase in credit is essentially the personal exemption you lost: $600/.15 = $4,000.
re: Tax Reform Discussion ThreadPosted by The Spleen on 11/3/17 at 8:31 am to SLafourche07
From my read of it, for the bulk majority of fairly standard returns, most will see a slight benefit. I have some big problems with a few of the details in it though for certain special circumstances.
1. Eliminating the adoption credit is absolutely horrible. We need more people adopting kids, and the adoption credit was a huge incentive for people to do so. Eliminating it is going to lead to less people adopting, increasing kids in foster care, increasing demand for abortion, etc. Horrible, horrible idea.
2. It repeals the exclusion of employer-paid moving expenses from taxable income. We're a transient economy with people moving all the time. Taxing moving assistance is bad policy in today's economy.
3. Repeal of deductions for non-reimbursed employee business expenses. Again, we're a transient economy with lots of people working from home. Many of them work for employers that don't reimburse them for mileage and other business expenses. Even with the increased standard deduction, this will hurt a lot of these people, and is also bad policy is this current economy.
4. Doing nothing on the carried interest loophole. Some Republicans have been promising doing this for years. Trump promised to do it while campaigning.
5. Eliminating the student loan interest deduction. I can't even wrap my head around the thinking behind this one. IMO, it should have been increased.
Those are the most glaring problems I've seen in minimal reading of it. I saw something that the Historical Tax Credit was eliminated, which is a bad idea as well if true.
1. Eliminating the adoption credit is absolutely horrible. We need more people adopting kids, and the adoption credit was a huge incentive for people to do so. Eliminating it is going to lead to less people adopting, increasing kids in foster care, increasing demand for abortion, etc. Horrible, horrible idea.
2. It repeals the exclusion of employer-paid moving expenses from taxable income. We're a transient economy with people moving all the time. Taxing moving assistance is bad policy in today's economy.
3. Repeal of deductions for non-reimbursed employee business expenses. Again, we're a transient economy with lots of people working from home. Many of them work for employers that don't reimburse them for mileage and other business expenses. Even with the increased standard deduction, this will hurt a lot of these people, and is also bad policy is this current economy.
4. Doing nothing on the carried interest loophole. Some Republicans have been promising doing this for years. Trump promised to do it while campaigning.
5. Eliminating the student loan interest deduction. I can't even wrap my head around the thinking behind this one. IMO, it should have been increased.
Those are the most glaring problems I've seen in minimal reading of it. I saw something that the Historical Tax Credit was eliminated, which is a bad idea as well if true.
re: Tax Reform Discussion ThreadPosted by Lima Whiskey on 11/3/17 at 8:44 am to The Spleen
The problem with student loans these days is that they’re too cheap.
I have a fair bit of student loan debt, but eliminating the deduction is a good thing.
People (like me) will make better choices, and schools will start pricing their product more responsibly.
I have a fair bit of student loan debt, but eliminating the deduction is a good thing.
People (like me) will make better choices, and schools will start pricing their product more responsibly.
re: Tax Reform Discussion ThreadPosted by The Spleen on 11/3/17 at 8:53 am to Lima Whiskey
quote:
People (like me) will make better choices, and schools will start pricing their product more responsibly.
Neither of those things will happen. The deduction now is pretty paltry to begin with, and phases out at pretty low income levels, so really the only people taking full advantage of it are those right out of school.
re: Tax Reform Discussion ThreadPosted by tigeraddict on 11/3/17 at 8:57 am to The Spleen
quote:
5. Eliminating the student loan interest deduction. I can't even wrap my head around the thinking behind this one. IMO, it should have been increased.
With the standard deduction doubling, a married couple falling within the current student loan interest earnings cap still should get more back. Coupled with a lower rate. Still would be a win win.
Now there will be a change in our responses to paying off SLs earlier now.
re: Tax Reform Discussion ThreadPosted by Golfer on 11/3/17 at 8:57 am to The Spleen
quote:
and phases out at pretty low income levels
It phases out at like $150k AGI for MFJ.
re: Tax Reform Discussion ThreadPosted by southernelite on 11/3/17 at 9:10 am to The Spleen
quote:
Neither of those things will happen. The deduction now is pretty paltry to begin with, and phases out at pretty low income levels, so really the only people taking full advantage of it are those right out of school.
The average student loan interest deduction is currently $1100, translating to about $275 in the 25% bracket and phases out between $65-80k for single.
It's a pretty paltry deduction and doesn't provide any incentive to pay your student loans.
However, people with high student loan balances and low income will be worse off. And those of who have small student loan balances are in the phase out bracket or completely phased out it doesn't make any bit of difference.
This post was edited on 11/3 at 9:11 am
re: Tax Reform Discussion ThreadPosted by The Spleen on 11/3/17 at 9:13 am to tigeraddict
quote:
With the standard deduction doubling,
I get that, but the student loan deduction is an above the line deduction so it would be an added benefit to a lot of young professionals just getting started in their careers.
re: Tax Reform Discussion ThreadPosted by Golfer on 11/3/17 at 9:16 am to The Spleen
quote:
I get that, but the student loan deduction is an above the line deduction so it would be an added benefit to a lot of young professionals just getting started in their careers.
and that young professional that is just getting started is almost always filing a 1040ez. So their standard deduction just got doubled. More than offsetting the student loan deduction, even if it’s “above the line”.
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re: Tax Reform Discussion ThreadPosted by LSUtoOmaha on 11/3/17 at 10:09 am to Golfer
People will also have less of an incentive to stretch out their student loans, which in my opinion is a good thing.
re: Tax Reform Discussion ThreadPosted by AUtigerNOLA on 11/3/17 at 10:26 am to lynxcat
Can we have a link outlining the reform?
re: Tax Reform Discussion ThreadPosted by LSUtoOmaha on 11/3/17 at 10:29 am to LSUtoOmaha
On the personal exemption/standard deduction front, most households, keeping in mind 69% choose standard deduction, will benefit by having an additional 4,000 in income exempt from federal taxes (12,000 Standard increase, 8000 personal decrease). So if you are at the 25% margin that will be a 1,000 after tax savings.
re: Tax Reform Discussion ThreadPosted by lnomm34 on 11/3/17 at 10:31 am to AUtigerNOLA
Edited. I ran the numbers again. Within $500 of my 2016 taxes using my numbers from that year.
This post was edited on 11/3 at 10:57 am
re: Tax Reform Discussion ThreadPosted by BACONisMEATcandy on 11/3/17 at 10:38 am to matthew25
quote:
I just bought a second house with a large mortgage and taxes.
I'm going to lose. Bigly.
My understanding is that everything that was under contract by yesterday is grandfathered in and not capped. Is that not correct?
re: Tax Reform Discussion ThreadPosted by lnomm34 on 11/3/17 at 10:46 am to TigerDeBaiter
quote:quote:
My understanding is that the only cohort to be worse off would be (a) those making between $150k and $350k who (b) itemize their deductions.
The upper middle class, as usual takes it in the fricking arse. It’s always the responsible hard working people that get shafted. Why should I pay any more under this supposed “tax reform”?
Not a fan.
See my post above. You guys ain't kidding.
re: Tax Reform Discussion ThreadPosted by SLafourche07 on 11/3/17 at 10:47 am to lnomm34
quote:
Unless I'm calculating it incorrectly, my taxes would go up. I ran the numbers based on my return from 2016.
No personal exemptions under the new plan. My itemized deductions last year were almost $21,000. Personal exemptions amounted to another $12,150.
Under the current plan, I wouldn't be able to itemize and wouldn't get the personal exemptions.
The lower tax brackets don't offset that for me. Again, if I calculated correctly, my taxes would increase by around $6400 a year.
Just very roughly because of the amount of information provided:
2016 Itemized: $21,000
2016 Exemptions: $12,150
Total: $33,150
Less New Standard Deduction: $24,000
Difference: $9,150
So say you had AGI of $150,000:
2016 Taxable Income: $116,850
Tax Before Credits: $20,754
Proposed Taxable Income: $126,000
Tax Before Credits: $19,800
Like I said this is pretty rough and without knowing more about your income and the rest of your situation it could be way off, but I figured I'd give it a shot.
re: Tax Reform Discussion ThreadPosted by The Spleen on 11/3/17 at 10:52 am to lnomm34
I ran the numbers last night, and I come out about the same using last year's tax return.
However, my wife's job situation changed this year and she started working from home and on the road exclusively. So potentially losing the Home Office and non-reimbursed business expenses deduction may be a kick in the balls.
However, my wife's job situation changed this year and she started working from home and on the road exclusively. So potentially losing the Home Office and non-reimbursed business expenses deduction may be a kick in the balls.
re: Tax Reform Discussion ThreadPosted by lnomm34 on 11/3/17 at 10:59 am to SLafourche07
Your numbers were off, but your calculations made me rerun mine. Somehow I screwed up the calculation for the taxes on the first $89,999.
It's a wash, basically for me. Looks like I'd owe around $500 less under the new plan using my 2016 numbers.
It's a wash, basically for me. Looks like I'd owe around $500 less under the new plan using my 2016 numbers.
re: Tax Reform Discussion ThreadPosted by AUtigerNOLA on 11/3/17 at 11:00 am to The Spleen
What main things you need to adjust besides the standard deduction? I wanted to calculate myself.
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