Re-read my original post. I said taxable income. And noted that the question is how the various deductions get you to your taxable income.bluehenbillk wrote:You must've learned the "new math" they teach in schools nowadays. No idea how you come up with those #'s. If you lived for filling out Schedule A (like I did to the tune of around $35K last year) you're in for a sick wake-up call.HI54UNI wrote:
If I did my math correctly a married couple filing jointly with taxable income (income after whatever deductions they qualify for) of $200K sees their tax bill go down about $4,600. Same couple with $100K taxable income saves about $3,200.
Personal exemptions - gone
Healthcare exemptions - gone
State & local income exemptions - gone
What stays:
Mortgage interest - unless you're house was over $500K (but if you take the doubled standard deduction this is gone too)
Property tax deduction - up to $10K, but again if you take the doubled standard deduction this is gone to)
Charitable giving
So the bottom line - if you claimed more than $24,000 on Schedule A last year you're screwed, because you can no longer itemize deductions
Tax Bill is a loser
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Re: Tax Bill is a loser
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Re: Tax Bill is a loser
Thank God for TurboTax!HI54UNI wrote:Re-read my original post. I said taxable income. And noted that the question is how the various deductions get you to your taxable income.bluehenbillk wrote:
You must've learned the "new math" they teach in schools nowadays. No idea how you come up with those #'s. If you lived for filling out Schedule A (like I did to the tune of around $35K last year) you're in for a sick wake-up call.
Personal exemptions - gone
Healthcare exemptions - gone
State & local income exemptions - gone
What stays:
Mortgage interest - unless you're house was over $500K (but if you take the doubled standard deduction this is gone too)
Property tax deduction - up to $10K, but again if you take the doubled standard deduction this is gone to)
Charitable giving
So the bottom line - if you claimed more than $24,000 on Schedule A last year you're screwed, because you can no longer itemize deductions
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Re: Tax Bill is a loser
From reading comments on message boards and article sections, everyone seems as confused about the proposed changes as the existing code.93henfan wrote:The disappointing part of all of this is that it doesn’t really do anything to simplify the tax code. These changes shrink it from about 73,954 pages to maybe 73,950.
Yay.
NPR did have a story yesterday about why the tax code is tedious though...in short people and corporations took so many advantages of the tax code (and still do) that it's been patched so much over the years until we have what we do now. And to be fair, a simplified tax code does create more loop holes.
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Re: Tax Bill is a loser
There are very few deductions anymore - basically they're fixing it that for the great majority of people it no longer makes sense to itemize as the "doubled" standard deduction will now be greater than what is left of itemizing.HI54UNI wrote:
Re-read my original post. I said taxable income. And noted that the question is how the various deductions get you to your taxable income.
I haven't read anything on dividends, etc that typically complicate returns but some of the losers will be accountants, H&R Block, Liberty Tax Service, etc as doing your own taxes will be easier than ever moving forward.
So if this passes before the end of the calendar year are we paying this new system in February when everyone has all their tax info or it kicks in winter/spring of 2019?
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Re: Tax Bill is a loser
If you aren't filling out Schedule A, or have any investments, I'm not sure why people were ever/are ever going to H&R Block or anything like that. I know people who fill out a 1040EZ and they go and pay for these services. Crazy.bluehenbillk wrote:There are very few deductions anymore - basically they're fixing it that for the great majority of people it no longer makes sense to itemize as the "doubled" standard deduction will now be greater than what is left of itemizing.HI54UNI wrote:
Re-read my original post. I said taxable income. And noted that the question is how the various deductions get you to your taxable income.
I haven't read anything on dividends, etc that typically complicate returns but some of the losers will be accountants, H&R Block, Liberty Tax Service, etc as doing your own taxes will be easier than ever moving forward.
So if this passes before the end of the calendar year are we paying this new system in February when everyone has all their tax info or it kicks in winter/spring of 2019?
People who would get screwed with this tax proposal, like you said, are people who are claiming far in excess of the $24k doubled standard deduction (married filing jointly), and especially so if you were still able to take medical deductions after that limit had been raised recently. So people who bought houses recently (when prices were higher), or bought houses in states where relative property values are just more than other places, or bought bigger houses (so bigger mortgages), and people that live in deep blue states where their state and local income taxes are well in excess of $10k.
As for the simplification, they are trying to get to a point where people could fill out something the size of a postcard to do their taxes. If my taxes stay even or even go down a hair (and I have to look at my taxes again but I think they could go down a little) and I can do my taxes in half or even less time than that then I'm all in favor for it. I dated a girl from England and, granted, it was a while ago, she said, prior to working on secondment in America, that she never had to file for taxes - ever - it was all just taken care of through what came out of your paycheck. I could live with that.
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Re: Tax Bill is a loser
I strongly encourage EVERYONE to educate themselves on this and calculate how it effects you. I re-did my 2016 federal tax return tonight with the proposed changes and I would pay $4,500-$5,000 MORE in tax with this new format, and I'm in PA - a state that voted Red. This would truly be a disaster if passed as is.
Last edited by bluehenbillk on Fri Nov 03, 2017 5:32 am, edited 1 time in total.
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Re: Tax Bill is a loser
Well, if it is anything, it is a giant experiment on what happens when you take away the tax subsidy that has existed on housing. No doubt that will have the biggest impact on the economy.
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Re: Tax Bill is a loser
Trump declared war on the home building industry. Be interesting to see how that one plays out.
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Re: Tax Bill is a loser
I redid my 2016 taxes. Tax bill dropped $3000. Taxable income went up due to the loss of deductions. Main reason for the tax decrease is there is no 28% bracket after $90K. Admittedly, I don't live in a high tax state.
Re: Tax Bill is a loser
We're in the same boat.OL FU wrote:I redid my 2016 taxes. Tax bill dropped $3000. Taxable income went up due to the loss of deductions. Main reason for the tax decrease is there is no 28% bracket after $90K. Admittedly, I don't live in a high tax state.
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Re: Tax Bill is a loser
The more you deducted on the old plan the more of a loser you are now. The personal exemption/deductions are now gone and replaced with a Family (old Child tax Credit) Credit program now that never makes up that loss fully, plus for 98% of the people your deductions are now capped at the new "doubled" standard deduction of $24K.
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Re: Tax Bill is a loser
Wasn't expressing an opinion just putting the impact on me out there.bluehenbillk wrote:The more you deducted on the old plan the more of a loser you are now. The personal exemption/deductions are now gone and replaced with a Family (old Child tax Credit) Credit program now that never makes up that loss fully, plus for 98% of the people your deductions are now capped at the new "doubled" standard deduction of $24K.
Personally , I would like to see almost all deductions go away, but the only way to make that work would be to substantially lower the rates which of course isn't going to happen.
Personally, with the federal rates where they are now I think the state and local tax deduction should stay in. Not so much from a issue of low tax state versus high tax state but because there is an inherent inequity in the income tax calculation (which you can do absolutely nothing about) and that's that most high tax states are also high cost of living states. Which means $100,000 in South Carolina is a lot more than $100,000 in New York, yet with the exception of certain deductions both incomes are taxed the same.
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Re: Tax Bill is a loser
Are your deductions capped at $24K or do you just need to get over $24K to itemize? I understand that the items that you can itemize are different now.bluehenbillk wrote:The more you deducted on the old plan the more of a loser you are now. The personal exemption/deductions are now gone and replaced with a Family (old Child tax Credit) Credit program now that never makes up that loss fully, plus for 98% of the people your deductions are now capped at the new "doubled" standard deduction of $24K.
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Re: Tax Bill is a loser
They've basically rigged/changed the system to cap it at $24K for 98% or more of the population, you need to be able to deduct more than $14K between mortgage interest & charitable giving to itemize (real estate taxes are capped now at 10K). So yes, if you're married and the standard deduction is now $24K so you'd only itemize moving forward if it was more than that.HI54UNI wrote: Are your deductions capped at $24K or do you just need to get over $24K to itemize? I understand that the items that you can itemize are different now.
I itemized quite a bit more than $24K last year.
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Re: Tax Bill is a loser
Just playing devil's advocate here. Not fully up to speed on this issue, but....OL FU wrote: Personally, with the federal rates where they are now I think the state and local tax deduction should stay in. Not so much from a issue of low tax state versus high tax state but because there is an inherent inequity in the income tax calculation (which you can do absolutely nothing about) and that's that most high tax states are also high cost of living states. Which means $100,000 in South Carolina is a lot more than $100,000 in New York, yet with the exception of certain deductions both incomes are taxed the same.
High cost of living states have higher wages to help compensate, no?
An engineer in NJ is paid a lot more than an engineer in SE VA doing the same work. Shouldn't that be enough to compensate for the cost of living? Why is it necessary for another level of benefit at the expense of the engineer in SE VA?
Re: Tax Bill is a loser
Yep. You're the loser in this, but you're the minority.bluehenbillk wrote:They've basically rigged/changed the system to cap it at $24K for 98% or more of the population, you need to be able to deduct more than $14K between mortgage interest & charitable giving to itemize (real estate taxes are capped now at 10K). So yes, if you're married and the standard deduction is now $24K so you'd only itemize moving forward if it was more than that.HI54UNI wrote: Are your deductions capped at $24K or do you just need to get over $24K to itemize? I understand that the items that you can itemize are different now.
I itemized quite a bit more than $24K last year.
Now you kind of know what it's like to be a pawn. Like when the President slaps a pay freeze on you for several years or a hiring freeze. As long as the majority can say "yeah, screw them", it's politically viable.
The winners in this bill are obviously corporations. I don't remember what (R) Congressman it was defending this on TV yesterday, but he said the corporate rate cut will benefit everyone in the form of increased wages. That may be true, but we won't know for ten years.
Last edited by 93henfan on Fri Nov 03, 2017 6:09 am, edited 1 time in total.
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Re: Tax Bill is a loser
93henfan wrote:Yep. You're the loser in this, but you're the minority.bluehenbillk wrote:
They've basically rigged/changed the system to cap it at $24K for 98% or more of the population, you need to be able to deduct more than $14K between mortgage interest & charitable giving to itemize (real estate taxes are capped now at 10K). So yes, if you're married and the standard deduction is now $24K so you'd only itemize moving forward if it was more than that.
I itemized quite a bit more than $24K last year.
Now you kind of know what it's like to be a pawn. Like when the President slaps a pay freeze on you for several years or a hiring freeze. As long as the majority can say "yeah, screw them", it's politically viable.
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Re: Tax Bill is a loser
Well first like I said there is nothing you can do about it but it isn't a matter of higher compensation to do the same work. The tax code is based on an absolute dollar value. So Let's say I make $100,000 in South Carolina and it cost me $35,000 to live and I pay $25,000 in taxes. I'm $40,000 ahead. I live in NYC make $100,000 and it cost me $60,000 to live and I pay $30,000 in taxes. I'm $10,000 ahead.CAA Flagship wrote:Just playing devil's advocate here. Not fully up to speed on this issue, but....OL FU wrote: Personally, with the federal rates where they are now I think the state and local tax deduction should stay in. Not so much from a issue of low tax state versus high tax state but because there is an inherent inequity in the income tax calculation (which you can do absolutely nothing about) and that's that most high tax states are also high cost of living states. Which means $100,000 in South Carolina is a lot more than $100,000 in New York, yet with the exception of certain deductions both incomes are taxed the same.
High cost of living states have higher wages to help compensate, no?
An engineer in NJ is paid a lot more than an engineer in SE VA doing the same work. Shouldn't that be enough to compensate for the cost of living? Why is it necessary for another level of benefit at the expense of the engineer in SE VA?
Like I said there is no way around this because if we attempted to adjust federal income taxes based on cost of living there would certainly be a revolt of the highest magnitude. But still a dollar ain't worth the same in every geographical location.
Re: Tax Bill is a loser
I laughed at that. We all know how corporations, on the whole, value wages over profits.93henfan wrote:Yep. You're the loser in this, but you're the minority.bluehenbillk wrote:
They've basically rigged/changed the system to cap it at $24K for 98% or more of the population, you need to be able to deduct more than $14K between mortgage interest & charitable giving to itemize (real estate taxes are capped now at 10K). So yes, if you're married and the standard deduction is now $24K so you'd only itemize moving forward if it was more than that.
I itemized quite a bit more than $24K last year.
Now you kind of know what it's like to be a pawn. Like when the President slaps a pay freeze on you for several years or a hiring freeze. As long as the majority can say "yeah, screw them", it's politically viable.
The winners in this bill are obviously corporations. I don't remember what (R) Congressman it was defending this on TV yesterday, but he said the corporate rate cut will benefit everyone in the form of increased wages. That may be true, but we won't know for ten years.
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Re: Tax Bill is a loser
Searching for a similar YouTube to the one previously posted but entitled, "Fuck New Jersey, New York, and California!"OL FU wrote:Well first like I said there is nothing you can do about it but it isn't a matter of higher compensation to do the same work. The tax code is based on an absolute dollar value. So Let's say I make $100,000 in South Carolina and it cost me $35,000 to live and I pay $25,000 in taxes. I'm $40,000 ahead. I live in NYC make $100,000 and it cost me $60,000 to live and I pay $30,000 in taxes. I'm $10,000 ahead.CAA Flagship wrote: Just playing devil's advocate here. Not fully up to speed on this issue, but....
High cost of living states have higher wages to help compensate, no?
An engineer in NJ is paid a lot more than an engineer in SE VA doing the same work. Shouldn't that be enough to compensate for the cost of living? Why is it necessary for another level of benefit at the expense of the engineer in SE VA?
Like I said there is no way around this because if we attempted to adjust federal income taxes based on cost of living there would certainly be a revolt of the highest magnitude. But still a dollar ain't worth the same in every geographical location.
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Re: Tax Bill is a loser
A dollar isn't. But compensation for similar work/services isn't the same either.OL FU wrote:Well first like I said there is nothing you can do about it but it isn't a matter of higher compensation to do the same work. The tax code is based on an absolute dollar value. So Let's say I make $100,000 in South Carolina and it cost me $35,000 to live and I pay $25,000 in taxes. I'm $40,000 ahead. I live in NYC make $100,000 and it cost me $60,000 to live and I pay $30,000 in taxes. I'm $10,000 ahead.CAA Flagship wrote: Just playing devil's advocate here. Not fully up to speed on this issue, but....
High cost of living states have higher wages to help compensate, no?
An engineer in NJ is paid a lot more than an engineer in SE VA doing the same work. Shouldn't that be enough to compensate for the cost of living? Why is it necessary for another level of benefit at the expense of the engineer in SE VA?
Like I said there is no way around this because if we attempted to adjust federal income taxes based on cost of living there would certainly be a revolt of the highest magnitude. But still a dollar ain't worth the same in every geographical location.
A person making $100k in SC is not necessarily doing the same job as a person making $100k in NYC.
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Re: Tax Bill is a loser
Thus, one of the main reasons I moved to Texas...lower cost of living over Virginia (where I was) and most of the areas I looked at that we wanted to live in...OL FU wrote:Well first like I said there is nothing you can do about it but it isn't a matter of higher compensation to do the same work. The tax code is based on an absolute dollar value. So Let's say I make $100,000 in South Carolina and it cost me $35,000 to live and I pay $25,000 in taxes. I'm $40,000 ahead. I live in NYC make $100,000 and it cost me $60,000 to live and I pay $30,000 in taxes. I'm $10,000 ahead.CAA Flagship wrote: Just playing devil's advocate here. Not fully up to speed on this issue, but....
High cost of living states have higher wages to help compensate, no?
An engineer in NJ is paid a lot more than an engineer in SE VA doing the same work. Shouldn't that be enough to compensate for the cost of living? Why is it necessary for another level of benefit at the expense of the engineer in SE VA?
Like I said there is no way around this because if we attempted to adjust federal income taxes based on cost of living there would certainly be a revolt of the highest magnitude. But still a dollar ain't worth the same in every geographical location.
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Re: Tax Bill is a loser
Truly - those are the places where people will just be walloped by the proposed tax - really expensive real estate and relatively very high state taxes. And the states on the periphery of those states feel the same hit, but to a lesser magnitude. The further away from those states, the more the revised tax will benefit. Basically, the more you itemize away from $24k the more you are hurt. Anyone really close to the itemize of $24k or under will benefit.93henfan wrote:Searching for a similar YouTube to the one previously posted but entitled, "**** New Jersey, New York, and California!"OL FU wrote:
Well first like I said there is nothing you can do about it but it isn't a matter of higher compensation to do the same work. The tax code is based on an absolute dollar value. So Let's say I make $100,000 in South Carolina and it cost me $35,000 to live and I pay $25,000 in taxes. I'm $40,000 ahead. I live in NYC make $100,000 and it cost me $60,000 to live and I pay $30,000 in taxes. I'm $10,000 ahead.
Like I said there is no way around this because if we attempted to adjust federal income taxes based on cost of living there would certainly be a revolt of the highest magnitude. But still a dollar ain't worth the same in every geographical location.
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Re: Tax Bill is a loser
That's true but they are paying the same tax rate for the same compensation (forget what job they have). That's the point. Theoretically although not practical the tax rates are designed around cost of living. We are willing to tax $1,000,000 at 40% theoretically because that compensation can afford it (theoretically mind you). We aren't willing to tax $20,000 at 40% because that compensation can't afford it.CAA Flagship wrote:A dollar isn't. But compensation for similar work/services isn't the same either.OL FU wrote:
Well first like I said there is nothing you can do about it but it isn't a matter of higher compensation to do the same work. The tax code is based on an absolute dollar value. So Let's say I make $100,000 in South Carolina and it cost me $35,000 to live and I pay $25,000 in taxes. I'm $40,000 ahead. I live in NYC make $100,000 and it cost me $60,000 to live and I pay $30,000 in taxes. I'm $10,000 ahead.
Like I said there is no way around this because if we attempted to adjust federal income taxes based on cost of living there would certainly be a revolt of the highest magnitude. But still a dollar ain't worth the same in every geographical location.
A person making $100k in SC is not necessarily doing the same job as a person making $100k in NYC.