Pls Help me understand 2018 SALT deductions.

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sharukh
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Pls Help me understand 2018 SALT deductions.

Post by sharukh »

Hi,

My google search results didn't give me any good articles that help me understand this, so reaching out to you.

Situation:
State income taxes: 26,000
property taxes: 6,000
Mortgage Interest: 12,000

In 2017, We(MarriedFilliongJointly) could deduct 44,000 from Federal income by taking itemized deductions and forgoing standard deduction.


For 2018:
we can take: 24,000 standard deduction + 10,000 in SALT + 12,000 in Mortgage Interest: Total = 46,000

We had to Pay AMT for first time in 2017, so I dont yet understand that and how it affects in overall.

Thank you.
Last edited by sharukh on Fri Mar 23, 2018 10:41 pm, edited 1 time in total.
The Wizard
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Re: Pls Help me understand 2018 SALT deductions.

Post by The Wizard »

You cannot take both the standard deduction AND the SALT + mortgage interest itemized deductions.
It's one or the other...
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The Wizard
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Re: Pls Help me understand 2018 SALT deductions.

Post by The Wizard »

...and what does "forging standard deduction" mean?
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Sandi_k
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Re: Pls Help me understand 2018 SALT deductions.

Post by Sandi_k »

The Wizard wrote: Fri Mar 23, 2018 10:21 pm ...and what does "forging standard deduction" mean?
I think he means "forgoing the standard deduction."
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noraz123
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Re: Pls Help me understand 2018 SALT deductions.

Post by noraz123 »

The Wizard wrote: Fri Mar 23, 2018 10:21 pm ...and what does "forging standard deduction" mean?
I assume the OP meant forgoing.
Topic Author
sharukh
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Re: Pls Help me understand 2018 SALT deductions.

Post by sharukh »

Thanks. Fixed the spelling mistake
The Wizard wrote: Fri Mar 23, 2018 10:21 pm ...and what does "forging standard deduction" mean?
Topic Author
sharukh
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Re: Pls Help me understand 2018 SALT deductions.

Post by sharukh »

The Wizard wrote: Fri Mar 23, 2018 10:19 pm You cannot take both the standard deduction AND the SALT + mortgage interest itemized deductions.
It's one or the other...
So it is either:
Standard : 24000
OR
SALT + mortgage interest: 10,000(Maximum allowed) + 12,000 = 22,000

Is that right?
So usually one picks the maximum of the either: So I still get to pick standard Deduction in the above situation, right?

Thanks.
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Pranav
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Re: Pls Help me understand 2018 SALT deductions.

Post by Pranav »

sharukh wrote: Fri Mar 23, 2018 10:44 pm
The Wizard wrote: Fri Mar 23, 2018 10:19 pm You cannot take both the standard deduction AND the SALT + mortgage interest itemized deductions.
It's one or the other...
So it is either:
Standard : 24000
OR
SALT + mortgage interest: 10,000(Maximum allowed) + 12,000 = 22,000

Is that right?
So usually one picks the maximum of the either: So I still get to pick standard Deduction in the above situation, right?

Thanks.
Correct
https://www.bogleheads.org/wiki
Topic Author
sharukh
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Re: Pls Help me understand 2018 SALT deductions.

Post by sharukh »

Pranav wrote: Fri Mar 23, 2018 11:16 pm
sharukh wrote: Fri Mar 23, 2018 10:44 pm
The Wizard wrote: Fri Mar 23, 2018 10:19 pm You cannot take both the standard deduction AND the SALT + mortgage interest itemized deductions.
It's one or the other...
So it is either:
Standard : 24000
OR
SALT + mortgage interest: 10,000(Maximum allowed) + 12,000 = 22,000

Is that right?
So usually one picks the maximum of the either: So I still get to pick standard Deduction in the above situation, right?

Thanks.
Correct
Thanks very much.
mega317
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Re: Pls Help me understand 2018 SALT deductions.

Post by mega317 »

I believe there are occasionally situations when it makes sense to itemize even below 24k, if your state requires you to itemize on the federal return in order to itemize on the state return, and the state has a puny standard deduction. All I know is that this is not the case in California.
cherijoh
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Re: Pls Help me understand 2018 SALT deductions.

Post by cherijoh »

mega317 wrote: Sat Mar 24, 2018 6:36 am I believe there are occasionally situations when it makes sense to itemize even below 24k, if your state requires you to itemize on the federal return in order to itemize on the state return, and the state has a puny standard deduction. All I know is that this is not the case in California.
Yes, unfortunately this is true for some states. If a state's 2017 tax form indicates you have to use the same method then you may have this dilemma unless they change the rules before 2018 taxes are due. Taxpayers who have a relatively small difference (like the OP) could end up having to do their taxes both ways to see which method gives them the lower combined taxes.
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BL
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Re: Pls Help me understand 2018 SALT deductions.

Post by BL »

I believe any charitable deductions over 2k would start to make itemizing worth more than the 24k SD.
12k + 10k + 2k = SD

Medical deductions over 7 1/2% (this year) might also apply. Can't remember what else.
leftcoaster
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Re: Pls Help me understand 2018 SALT deductions.

Post by leftcoaster »

BL wrote: Sat Mar 24, 2018 7:56 am I believe any charitable deductions over 2k would start to make itemizing worth more than the 24k SD.
12k + 10k + 2k = SD

Medical deductions over 7 1/2% (this year) might also apply. Can't remember what else.
In which case the OP should bunch them, perhaps with help of a DAF to smooth disbursements.
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BL
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Re: Pls Help me understand 2018 SALT deductions.

Post by BL »

leftcoaster wrote: Sat Mar 24, 2018 10:09 am
BL wrote: Sat Mar 24, 2018 7:56 am I believe any charitable deductions over 2k would start to make itemizing worth more than the 24k SD.
12k + 10k + 2k = SD

Medical deductions over 7 1/2% (this year) might also apply. Can't remember what else.
In which case the OP should bunch them, perhaps with help of a DAF to smooth disbursements.
+1
Topic Author
sharukh
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Re: Pls Help me understand 2018 SALT deductions.

Post by sharukh »

BL wrote: Sat Mar 24, 2018 11:52 am
leftcoaster wrote: Sat Mar 24, 2018 10:09 am
BL wrote: Sat Mar 24, 2018 7:56 am I believe any charitable deductions over 2k would start to make itemizing worth more than the 24k SD.
12k + 10k + 2k = SD

Medical deductions over 7 1/2% (this year) might also apply. Can't remember what else.
In which case the OP should bunch them, perhaps with help of a DAF to smooth disbursements.
+1
That is nice, Thank you.
inbox788
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Re: Pls Help me understand 2018 SALT deductions.

Post by inbox788 »

I was thinking of lumping together property tax payments every other year, but i just realized income tax and property tax were limited to same $10k, so I don't think I'll ever get to a point where it makes my donations deductible anymore.

I wonder if it ever makes sense to file married filing separate to reach the point where itemizing makes sense sooner.

https://www.wsj.com/articles/when-marri ... 1519381801
TBillT
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Re: Pls Help me understand 2018 SALT deductions.

Post by TBillT »

So as far as loopholes, some states give generous state tax credits for donations to certain state-favored non-profits. If your state has this type of program, presumably that is one possible way to essentially convert state tax owed into a donation. NJ is talking about re-defining state tax as a donation, to get around the SALT limits.
Buffetologist
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Re: Pls Help me understand 2018 SALT deductions.

Post by Buffetologist »

membership dues to a church, synagogue, mosque or other such religious organization are considered charitable contributions and are often overlooked. These are deductible.
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