Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Silk McCue
Posts: 3864
Joined: Thu Feb 25, 2016 7:11 pm

Re: Tax Bill Omnibus Thread

Post by Silk McCue » Wed Dec 20, 2017 2:03 pm

Diogenes wrote:
Wed Dec 20, 2017 1:34 pm
Re: Calculators for the Tax Reduction and Jobs Act
Anyone know of a good two-year comparison calculator of the tax bill before and after the new Act?
I tried one on Marketwatch (below) and it appears I'll be getting a significant reduction, but I want to cross-check it and compare 2017/2018 side by side. Also tried the taxplancalculator.com site above, but since I've never heard of the author...
https://www.marketwatch.com/story/the-n ... 2017-10-26
I ran the taxplancalculator.com tool and compared it against my own excel spreadsheet that I built for this whatif purpose.
Married Filing Jointly, no children, Florida, standard deduction - Identical results produced from both my spreadsheet and the online calculator.

KlangFool
Posts: 14688
Joined: Sat Oct 11, 2008 12:35 pm

Re: Tax Bill Omnibus Thread

Post by KlangFool » Wed Dec 20, 2017 2:04 pm

Folks,

If the personal exemption is suspended, what is the tax benefit of claiming my children as the dependent? Please enlightened me.

KlangFool

BogleAlltheWay
Posts: 348
Joined: Mon May 15, 2017 5:25 pm

Re: Tax Bill Omnibus Thread

Post by BogleAlltheWay » Wed Dec 20, 2017 2:05 pm

Does the new tax plan affect decisions to contribute 401k or Roth 401k?

KlangFool
Posts: 14688
Joined: Sat Oct 11, 2008 12:35 pm

Re: Tax Bill Omnibus Thread

Post by KlangFool » Wed Dec 20, 2017 2:07 pm

mffl wrote:
Wed Dec 20, 2017 1:53 pm
KlangFool wrote:
Wed Dec 20, 2017 1:50 pm
Folks,

As per my understanding, I should donate to the charity now for whatever amount that I budgeted for next year. This is true if my total itemized deduction for 2018 will not exceed the new standard deduction limit.

Please confirm.

KlangFool
Yep, that's my understanding. I'm currently considering contributing perhaps even several years' worth of charitable contributions in 2017 using a Donor Advised Fund, and then distributing the money to the charities whenever I see fit, and taking those capital gains off the table too. The impact of the tax bracket reduction going into 2018, plus taking the standard deduction for a few years, plus the cap gains benefit is pretty hard to ignore.
mffl,

This is a good idea. I do not donate enough to go this route.

KlangFool

tnjj
Posts: 33
Joined: Fri Apr 05, 2013 9:41 am

Re: Tax Bill Omnibus Thread

Post by tnjj » Wed Dec 20, 2017 2:08 pm

Concerning prepayment of SALT, the limitation on paying in 2017 is found in the second sentence of the flush language under Sec. 11042(a). Unless clarified by another statute or treasury regulation, my personal non-JD inclination is to take the plain language of the statute at face value.

Limitation on recharacterizations of Roth IRA CONVERSIONS is found in Sec. 13611 Unless clarified by another statute or treasury regulation, my personal non-JD inclination is to take the plain language of the statute at face value.

I’ll keep tuned in.

Edited to add “Limitation on” at beginning of second paragraph.
Last edited by tnjj on Wed Dec 20, 2017 2:14 pm, edited 1 time in total.

mffl
Posts: 96
Joined: Wed Dec 06, 2017 7:25 pm

Re: Tax Bill Omnibus Thread

Post by mffl » Wed Dec 20, 2017 2:08 pm

letsgobobby wrote:
Wed Dec 20, 2017 2:01 pm
Are the new estate tax exemptions permament, or do they grandfather in some future year? Are they adjusted for inflation?
https://www.bloomberg.com/news/articles ... rhaul-plan

The higher exemption amount sunsets in 2026, then it reverts back to the current level indexed for inflation. I'm not quite sure if the higher threshold is indexed for inflation prior to its sunset. Perhaps someone else has found something on that.

User avatar
Smorgasbord
Posts: 422
Joined: Fri Jun 10, 2016 8:12 pm

Re: Tax Bill Omnibus Thread

Post by Smorgasbord » Wed Dec 20, 2017 2:08 pm

rob65 wrote:
Wed Dec 20, 2017 1:53 pm
I might be wrong, so please verify this elsewhere, but I think one of the 3 changes required by Senate rules eliminated this provision. I think 529 withdrawals will still only be allowed for post-secondary education. Again, I might be wrong.
I'll definitely need to look into that. I know the Senate axed language stating that 529 plans could designate unborn babies as the beneficiary, but I'm not sure if the k-12 provisions also got axed.

homerj15
Posts: 55
Joined: Tue Jan 05, 2016 6:06 pm

Re: Tax Bill Omnibus Thread

Post by homerj15 » Wed Dec 20, 2017 2:09 pm

After carefully analyzing sections 164 and 11042 of the new tax law, I can confirm that the prepayment restrictions only apply to state and local INCOME taxes. I will be prepaying my 2018 property taxes by the end of this year.

mffl
Posts: 96
Joined: Wed Dec 06, 2017 7:25 pm

Re: Tax Bill Omnibus Thread

Post by mffl » Wed Dec 20, 2017 2:10 pm

KlangFool wrote:
Wed Dec 20, 2017 2:07 pm
mffl wrote:
Wed Dec 20, 2017 1:53 pm
KlangFool wrote:
Wed Dec 20, 2017 1:50 pm
Folks,

As per my understanding, I should donate to the charity now for whatever amount that I budgeted for next year. This is true if my total itemized deduction for 2018 will not exceed the new standard deduction limit.

Please confirm.

KlangFool
Yep, that's my understanding. I'm currently considering contributing perhaps even several years' worth of charitable contributions in 2017 using a Donor Advised Fund, and then distributing the money to the charities whenever I see fit, and taking those capital gains off the table too. The impact of the tax bracket reduction going into 2018, plus taking the standard deduction for a few years, plus the cap gains benefit is pretty hard to ignore.
mffl,

This is a good idea. I do not donate enough to go this route.

KlangFool
Ok. You're still almost certainly better off donating before the end of the year, as your marginal rate's probably higher this year, and you can take the standard deduction next year.

rob65
Posts: 340
Joined: Mon May 09, 2016 1:30 pm

Re: Tax Bill Omnibus Thread

Post by rob65 » Wed Dec 20, 2017 2:11 pm

mffl wrote:
Wed Dec 20, 2017 1:54 pm
rob65 wrote:
Wed Dec 20, 2017 1:53 pm
Smorgasbord wrote:
Wed Dec 20, 2017 1:38 pm
Well, it looks like 529 plans just got a whole lot more interesting:
TREATMENT OF ELEMENTARY AND SECONDARY TUITION.—Any reference in this subsection to the term ‘qualified higher education expense’ shall include a reference to expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school.”.
I for one am going to take a good look at upping my contributions for my preschool aged kids.
I might be wrong, so please verify this elsewhere, but I think one of the 3 changes required by Senate rules eliminated this provision. I think 529 withdrawals will still only be allowed for post-secondary education. Again, I might be wrong.
My understanding was the only thing related to 529 plans that got changed in today's revote was the ability to use 529s for home schooling.

http://fortune.com/2017/12/19/byrd-rule-gop-tax-bill/
You're right. I had misread the required change. I've edited my original response. Thanks for the correction and sorry about the mistake.

mffl
Posts: 96
Joined: Wed Dec 06, 2017 7:25 pm

Re: Tax Bill Omnibus Thread

Post by mffl » Wed Dec 20, 2017 2:12 pm

KlangFool wrote:
Wed Dec 20, 2017 2:04 pm
Folks,

If the personal exemption is suspended, what is the tax benefit of claiming my children as the dependent? Please enlightened me.

KlangFool
The bigger child tax credit, which is now $2000 instead of $1000 and applies to married couples up to 400k and individuals up to 200k.

It takes the combination of the bigger CTC (and higher phaseout limits) and the bigger standard deduction to offset the loss of personal exemptions. But in the end, it more than offsets it.

User avatar
Mlm
Posts: 434
Joined: Sat Apr 09, 2016 6:00 pm

Re: Tax Bill Omnibus Thread

Post by Mlm » Wed Dec 20, 2017 2:12 pm


hawkfan55
Posts: 326
Joined: Thu Apr 03, 2014 9:04 pm

Re: Tax Bill Omnibus Thread

Post by hawkfan55 » Wed Dec 20, 2017 2:12 pm

That's what I'm thinking. It may be wise for a lot of people to take full advantage of the 24% bracket as the next bracket down is only 2% lower, 24% is a pretty good rate, it's a pretty wide bracket, and the next one up is a huge jump (32%).
Would someone who is 63 or older want to limit conversions to 22% to keep Medicare costs as low as possible. I was also going to start Roth Conversions this year however, I'm not sure now. At 62, I was going to do Roth Conversions within the next week to the top of 25% bracket. Now, I'm thinking of waiting to start Roth Conversions next year.
Forum Library of Investing Advice: https://www.bogleheads.org/wiki/Main_Page

mffl
Posts: 96
Joined: Wed Dec 06, 2017 7:25 pm

Re: Tax Bill Omnibus Thread

Post by mffl » Wed Dec 20, 2017 2:12 pm

rob65 wrote:
Wed Dec 20, 2017 2:11 pm
mffl wrote:
Wed Dec 20, 2017 1:54 pm
rob65 wrote:
Wed Dec 20, 2017 1:53 pm
Smorgasbord wrote:
Wed Dec 20, 2017 1:38 pm
Well, it looks like 529 plans just got a whole lot more interesting:
TREATMENT OF ELEMENTARY AND SECONDARY TUITION.—Any reference in this subsection to the term ‘qualified higher education expense’ shall include a reference to expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school.”.
I for one am going to take a good look at upping my contributions for my preschool aged kids.
I might be wrong, so please verify this elsewhere, but I think one of the 3 changes required by Senate rules eliminated this provision. I think 529 withdrawals will still only be allowed for post-secondary education. Again, I might be wrong.
My understanding was the only thing related to 529 plans that got changed in today's revote was the ability to use 529s for home schooling.

http://fortune.com/2017/12/19/byrd-rule-gop-tax-bill/
You're right. I had misread the required change. I've edited my original response. Thanks for the correction and sorry about the mistake.
I only know that because I misread it initially too. :)

User avatar
catdude
Posts: 1772
Joined: Mon Jul 16, 2007 8:11 pm
Location: Central Oregon

Re: Tax Bill Omnibus Thread

Post by catdude » Wed Dec 20, 2017 2:12 pm

I'm assuming y'all would think that doing Roth conversions to the top of the new 12% bracket is a no-brainer. I'm wondering if I should do some additional converting at the 22% rate? One problem, though, is my state income tax rate is 9%. Any thoughts, folks?
catdude | | "As much as cats fight, there always seems to be plenty of kittens." (Abraham Lincoln)

User avatar
BolderBoy
Posts: 4534
Joined: Wed Apr 07, 2010 12:16 pm
Location: Colorado

Re: Tax Bill Omnibus Thread

Post by BolderBoy » Wed Dec 20, 2017 2:12 pm

letsgobobby wrote:
Wed Dec 20, 2017 2:01 pm
Are the new estate tax exemptions permament, or do they grandfather in some future year? Are they adjusted for inflation?
I think the new estate tax exemption expires in like 2026 or so, but will be effective for 2018.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

Silk McCue
Posts: 3864
Joined: Thu Feb 25, 2016 7:11 pm

Re: Tax Bill Omnibus Thread

Post by Silk McCue » Wed Dec 20, 2017 2:15 pm

BogleAlltheWay wrote:
Wed Dec 20, 2017 2:05 pm
Does the new tax plan affect decisions to contribute 401k or Roth 401k?
There may be some nuanced considerations that I am unaware of at this point, but generally, I see no meaningful change in the decision making process surrounding these investments.

mffl
Posts: 96
Joined: Wed Dec 06, 2017 7:25 pm

Re: Tax Bill Omnibus Thread

Post by mffl » Wed Dec 20, 2017 2:15 pm

homerj15 wrote:
Wed Dec 20, 2017 2:09 pm
After carefully analyzing sections 164 and 11042 of the new tax law, I can confirm that the prepayment restrictions only apply to state and local INCOME taxes. I will be prepaying my 2018 property taxes by the end of this year.
I'm curious about this one. I called my county and they said they wouldn't accept it, and they'd just send me a refund check. Would that just count as income for 2018, which I'd promptly re-pay? I confess I've never quite understood the mechanics of prepaying property taxes, especially when the taxing jurisdiction doesn't want your money. :)

Would be nice if we could make it work, though.

User avatar
Peter Foley
Posts: 5011
Joined: Fri Nov 23, 2007 10:34 am
Location: Lake Wobegon

Re: Tax Bill Omnibus Thread

Post by Peter Foley » Wed Dec 20, 2017 2:16 pm

It will be interesting to see how the provisions all play out together. Per my limited understanding of the bill with respect to State and Local INCOME tax deductions.

In January of this year I did a substantial Roth conversion and had Federal and State taxes withheld. With the passage of the bill being eminent, I have made additional charitable contributions this month to our DAF. Because of the additional charitable contributions I may get a state tax refund.

So will I lose credit for some of my state tax deduction? I could do a small IRA withdrawal before the end of the year without any withholding to increase my Federal and State taxes. My point is, that in a bill with so many moving parts, some of which seem retroactive in nature, it is difficult to effectively plan for the changes.

rob65
Posts: 340
Joined: Mon May 09, 2016 1:30 pm

Re: Tax Bill Omnibus Thread

Post by rob65 » Wed Dec 20, 2017 2:16 pm

Smorgasbord wrote:
Wed Dec 20, 2017 2:08 pm
rob65 wrote:
Wed Dec 20, 2017 1:53 pm
I might be wrong, so please verify this elsewhere, but I think one of the 3 changes required by Senate rules eliminated this provision. I think 529 withdrawals will still only be allowed for post-secondary education. Again, I might be wrong.
I'll definitely need to look into that. I know the Senate axed language stating that 529 plans could designate unborn babies as the beneficiary, but I'm not sure if the k-12 provisions also got axed.
Sorry, my initial response was incorrect. See mffl's comment and link. I think that only home-schooling expenses were effected by the last minute change.

Houe
Posts: 129
Joined: Wed Jun 29, 2016 9:04 am

Re: Tax Bill Omnibus Thread

Post by Houe » Wed Dec 20, 2017 2:17 pm

rob65 wrote:
Wed Dec 20, 2017 1:53 pm
Smorgasbord wrote:
Wed Dec 20, 2017 1:38 pm
Well, it looks like 529 plans just got a whole lot more interesting:
TREATMENT OF ELEMENTARY AND SECONDARY TUITION.—Any reference in this subsection to the term ‘qualified higher education expense’ shall include a reference to expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school.”.
I for one am going to take a good look at upping my contributions for my preschool aged kids.
I might be wrong, so please verify this elsewhere, but I think one of the 3 changes required by Senate rules eliminated this provision. I think 529 withdrawals will still only be allowed for post-secondary education. Again, I might be wrong.

I was wrong. See the link in mffl's response below.
I believe only paying home school expenses with 529 was eliminated. Paying private grade school expenses with 529 funds remained in the bill. That's how I understand it. Can someone confirm?

User avatar
JDCarpenter
Posts: 1404
Joined: Tue Sep 09, 2014 2:42 pm

Re: Tax Bill Omnibus Thread

Post by JDCarpenter » Wed Dec 20, 2017 2:18 pm

pshonore wrote:
Wed Dec 20, 2017 1:55 pm
Here's the language of the Roth IRA recharacterization clause:
Subpart B—Retirement Plans
SEC. 13611. REPEAL OF SPECIAL RULE PERMITTING RECHARACTERIZATION OF ROTH CONVERSIONS.

(a) In General.—Section 408A(d)(6)(B) is amended by adding at the end the following new clause:


“(iii) CONVERSIONS.—Subparagraph (A) shall not apply in the case of a qualified rollover contribution to which subsection (d)(3) applies (including by reason of subparagraph (C) thereof).”.

(b) Effective Date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2017.
I interpret that as saying a recharacterizion of a conversion made in 2017 is still allowed; others may interpret it differently.
Your reading makes sense, and Kitces agrees--although he indicates some uncertainty:
Fortunately, though, the new limit on Roth recharacterizations applies only for taxable years beginning after 12/31 of 2017 (i.e., the 2018 tax year and beyond). Which means existing already-completed 2017 Roth conversions should still be eligible to recharacterize in 2018 (since it would be recharacterizing a conversion for the 2017 tax year, while the new rules only apply in the 2018-and-beyond tax years). Although notably, the timing of the effective date for 2018 recharacterizations of 2017 conversion (i.e., whether they will be permitted or not) is still being debated by many tax commentators.
https://www.kitces.com/blog/final-gop-t ... trategies/ (emphasis added)

Time to correct my first response to you. :beer
Edit Signature

S_Track
Posts: 314
Joined: Sat Feb 18, 2017 12:33 pm

Re: Tax Bill Omnibus Thread

Post by S_Track » Wed Dec 20, 2017 2:20 pm

It might be too early for this question but I would guess that many of us will be moving from the 28 to the new 24% bracket. If using a three-fund in taxable, would the general recommendation be to use total bond instead of Muni's for the 24% bracket and below?

Seasonal
Posts: 631
Joined: Sun May 21, 2017 1:49 pm

Re: Tax Bill Omnibus Thread

Post by Seasonal » Wed Dec 20, 2017 2:20 pm

letsgobobby wrote:
Wed Dec 20, 2017 2:01 pm
Are the new estate tax exemptions permament, or do they grandfather in some future year? Are they adjusted for inflation?
They could always be changed by a future amendment.

My understanding is "similar to the last round of major tax law changes, includes a “sunset” provision that all of the individual tax law changes will lapse after the year 2025 (although the corporate tax law changes are permanent, as are the shift to using chained CPI for indexing tax brackets, and the repeal of the individual mandate)". https://www.kitces.com/blog/final-gop-t ... trategies/ and http://www.politifact.com/truth-o-meter ... -tax-bill/

keystone
Posts: 544
Joined: Tue Aug 28, 2012 12:34 pm

Re: Tax Bill Omnibus Thread

Post by keystone » Wed Dec 20, 2017 2:20 pm

Silk McCue wrote:
Wed Dec 20, 2017 2:03 pm
I ran the taxplancalculator.com tool and compared it against my own excel spreadsheet that I built for this whatif purpose.
Married Filing Jointly, no children, Florida, standard deduction - Identical results produced from both my spreadsheet and the online calculator.
I ran it and it calculated my estimated tax liability under the new plan exactly the same as my Excel calculation, however it overstated my tax liability under the current plan. This was due to a miscalculation of my state and local income taxes paid. Not a huge deal since I have a copy of my last 1040 handy.

Silk McCue
Posts: 3864
Joined: Thu Feb 25, 2016 7:11 pm

Re: Tax Bill Omnibus Thread

Post by Silk McCue » Wed Dec 20, 2017 2:21 pm

catdude wrote:
Wed Dec 20, 2017 2:12 pm
I'm assuming y'all would think that doing Roth conversions to the top of the new 12% bracket is a no-brainer. I'm wondering if I should do some additional converting at the 22% rate? One problem, though, is my state income tax rate is 9%. Any thoughts, folks?
Unless someone chimes in with unique insight I don't believe that the outcome of this analysis is any different for 12% and 22% brackets than it would be for 15% and 25% brackets. That subject has been discussed numerous times here and you can probably find answers in existing threads or the wiki.

User avatar
Mlm
Posts: 434
Joined: Sat Apr 09, 2016 6:00 pm

Re: Tax Bill Omnibus Thread

Post by Mlm » Wed Dec 20, 2017 2:21 pm

KlangFool wrote:
Wed Dec 20, 2017 2:04 pm
Folks,

If the personal exemption is suspended, what is the tax benefit of claiming my children as the dependent? Please enlightened me.

KlangFool
[/quot

" Child Tax Credit are dramatically increased, from the current thresholds of $75,000 for individuals and $110,000 for married couples, up to $200,000 for individuals and $400,000 for married couples. Although these thresholds are not indexed for inflation."

https://www.kitces.com/blog/final-gop-t ... trategies/

User avatar
FIREchief
Posts: 3794
Joined: Fri Aug 19, 2016 6:40 pm

Re: Tax Bill Omnibus Thread

Post by FIREchief » Wed Dec 20, 2017 2:22 pm

The good: the stretch IRA lives on!
The bad: Roth recharacterizations are dead (no more horse races, leap frog competitions or anything else leveraging mid-year market drops)

Time to front load that DAF..... 8-)
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

Drew31
Posts: 205
Joined: Mon Oct 22, 2012 1:18 pm

Re: Tax Bill Omnibus Thread

Post by Drew31 » Wed Dec 20, 2017 2:23 pm

Nate79 wrote:
Wed Dec 20, 2017 1:55 pm
Drew31 wrote:
Wed Dec 20, 2017 1:53 pm
Will be paying Jan and Feb mortgage payments this month. Doesn't look like I'll be itemizing any longer.
I would suggest to check with your mortgage company whether they will report the interest for those payments in 2017 or 2018.
Good idea to call. Just did and they state everything paid in 2017 would report on 2017 1098.


EDIT: It was determined regardless of what bank reports, only Jan payment is deductible for 2017. I will not be making Feb payment early.
Last edited by Drew31 on Fri Dec 22, 2017 9:16 am, edited 1 time in total.

User avatar
Meaty
Posts: 698
Joined: Mon Jul 22, 2013 7:35 pm
Location: Texas

Re: Tax Bill Omnibus Thread

Post by Meaty » Wed Dec 20, 2017 2:25 pm

Any impact to back door Roth availability?
"Discipline equals Freedom" - Jocko Willink

rkhusky
Posts: 7883
Joined: Thu Aug 18, 2011 8:09 pm

Re: Tax Bill Omnibus Thread

Post by rkhusky » Wed Dec 20, 2017 2:25 pm

Those with children will probably find that their marginal rate is increasing, even if their taxes go down. The Child Tax Credit is applied after taxes are computed, whereas the disappearing exemptions were applied before taxes were computed.

TG2
Posts: 197
Joined: Sat Nov 25, 2017 6:50 pm

Re: Tax Bill Omnibus Thread

Post by TG2 » Wed Dec 20, 2017 2:26 pm

letsgobobby wrote:
Wed Dec 20, 2017 1:59 pm
BolderBoy wrote:
Wed Dec 20, 2017 1:51 pm
So my impression of the comments here is that property taxes are NOT part of "SALT".

Is my understanding correct? It is only state and local INCOME taxes that are capped?
SALT definitely includes property tax.

Separate from that, the new law prohibits prepaying only state income taxes, but not property tax.
The problem though is that your state or county has to allow the prepayment of property tax. I was getting all ready to go in and give them a $10,000 check to prepay 2018 property taxes but then checked the county website. Washington state law prohibits the payment of property tax in a year before it is due, so I'm stuck with semi-annual payments and cannot bunch the deduction. Everyone needs to check their own locality before attempting this.

Seasonal
Posts: 631
Joined: Sun May 21, 2017 1:49 pm

Re: Tax Bill Omnibus Thread

Post by Seasonal » Wed Dec 20, 2017 2:27 pm

bob_m10 wrote:
Wed Dec 20, 2017 2:20 pm
It might be too early for this question but I would guess that many of us will be moving from the 28 to the new 24% bracket. If using a three-fund in taxable, would the general recommendation be to use total bond instead of Muni's for the 24% bracket and below?
Are you subject to state taxes? How confident are you that brackets won't change again? Would you incur costs switching (I have a fair amount of capital gain embedded in my munis).

TBM currently has an SEC yield of 2.5%. My favorite muni fund, NY long-term, is 2.3%. Ignoring risk (which is not trivial to compare), muni still seems better. YMMV.

BogleMelon
Posts: 2249
Joined: Mon Feb 01, 2016 11:49 am

Re: Tax Bill Omnibus Thread

Post by BogleMelon » Wed Dec 20, 2017 2:27 pm

Silk McCue wrote:
Wed Dec 20, 2017 2:03 pm
Diogenes wrote:
Wed Dec 20, 2017 1:34 pm
Re: Calculators for the Tax Reduction and Jobs Act
Anyone know of a good two-year comparison calculator of the tax bill before and after the new Act?
I tried one on Marketwatch (below) and it appears I'll be getting a significant reduction, but I want to cross-check it and compare 2017/2018 side by side. Also tried the taxplancalculator.com site above, but since I've never heard of the author...
https://www.marketwatch.com/story/the-n ... 2017-10-26
I ran the taxplancalculator.com tool and compared it against my own excel spreadsheet that I built for this whatif purpose.
Married Filing Jointly, no children, Florida, standard deduction - Identical results produced from both my spreadsheet and the online calculator.
Me too, it is identical to my spreadsheet..
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

NotWhoYouThink
Posts: 2807
Joined: Fri Dec 26, 2014 4:19 pm

Re: Tax Bill Omnibus Thread

Post by NotWhoYouThink » Wed Dec 20, 2017 2:28 pm

The child tax credits only apply to children under the age of 17. Not your college kids.
Last edited by NotWhoYouThink on Wed Dec 20, 2017 2:33 pm, edited 2 times in total.

User avatar
JDCarpenter
Posts: 1404
Joined: Tue Sep 09, 2014 2:42 pm

Re: Tax Bill Omnibus Thread

Post by JDCarpenter » Wed Dec 20, 2017 2:28 pm

Meaty wrote:
Wed Dec 20, 2017 2:25 pm
Any impact to back door Roth availability?
According to Kitces' excellent summary, no impact except barring later recharacterization. Here is the link again: https://www.kitces.com/blog/final-gop-t ... trategies/
Edit Signature

Tanelorn
Posts: 1677
Joined: Thu May 01, 2014 9:35 pm

Re: Tax Bill Omnibus Thread

Post by Tanelorn » Wed Dec 20, 2017 2:29 pm

Meaty wrote:
Wed Dec 20, 2017 2:25 pm
Any impact to back door Roth availability?
No change. You can also still recharacterize an annual contribution from a tIRA to a Roth or v versa if you decide you made a mistake or otherwise regret it, but you can't undo conversions made in 2018 onwards. Agree with others earlier that Roth conversions made in 2017 and attempted to be recharacterized in 2018 may be uncertain, but possibly still allowed.

KlangFool
Posts: 14688
Joined: Sat Oct 11, 2008 12:35 pm

Re: Tax Bill Omnibus Thread

Post by KlangFool » Wed Dec 20, 2017 2:29 pm

Mlm wrote:
Wed Dec 20, 2017 2:21 pm
KlangFool wrote:
Wed Dec 20, 2017 2:04 pm
Folks,

If the personal exemption is suspended, what is the tax benefit of claiming my children as the dependent? Please enlightened me.

KlangFool
[/quot

" Child Tax Credit are dramatically increased, from the current thresholds of $75,000 for individuals and $110,000 for married couples, up to $200,000 for individuals and $400,000 for married couples. Although these thresholds are not indexed for inflation."

https://www.kitces.com/blog/final-gop-t ... trategies/
Thanks.

KlangFool
Last edited by KlangFool on Wed Dec 20, 2017 2:30 pm, edited 1 time in total.

User avatar
JDCarpenter
Posts: 1404
Joined: Tue Sep 09, 2014 2:42 pm

Re: Tax Bill Omnibus Thread

Post by JDCarpenter » Wed Dec 20, 2017 2:30 pm

Tanelorn wrote:
Wed Dec 20, 2017 1:48 pm
This is a good personal summary of tax changes for individuals.

https://www.kitces.com/blog/final-gop-t ... trategies/
+ gazillions. Thanks for that link--I hadn't made it to his site yet today. :beer
Edit Signature

mw1739
Posts: 625
Joined: Mon Mar 21, 2011 5:44 pm

Re: Tax Bill Omnibus Thread

Post by mw1739 » Wed Dec 20, 2017 2:30 pm

I expect to owe both state and federal taxes upon filing in April 2018 (not worried about penalties). Am I correct in my thought that I should make an estimated tax payment to pre-pay those before the end of the year so they are deductible for 2017? I expect to exceed the $10k SALT limitation going forward.

Isabelle77
Posts: 493
Joined: Thu Dec 17, 2015 1:43 pm

Re: Tax Bill Omnibus Thread

Post by Isabelle77 » Wed Dec 20, 2017 2:33 pm

TG2 wrote:
Wed Dec 20, 2017 2:26 pm
letsgobobby wrote:
Wed Dec 20, 2017 1:59 pm
BolderBoy wrote:
Wed Dec 20, 2017 1:51 pm
So my impression of the comments here is that property taxes are NOT part of "SALT".

Is my understanding correct? It is only state and local INCOME taxes that are capped?
SALT definitely includes property tax.

Separate from that, the new law prohibits prepaying only state income taxes, but not property tax.
The problem though is that your state or county has to allow the prepayment of property tax. I was getting all ready to go in and give them a $10,000 check to prepay 2018 property taxes but then checked the county website. Washington state law prohibits the payment of property tax in a year before it is due, so I'm stuck with semi-annual payments and cannot bunch the deduction. Everyone needs to check their own locality before attempting this.
Yes, I'm in Washington too and just received a terse email from our county treasurer. I'm curious if anyone knows changes to home office deductions and other home business expenses? My husband has a side gig that brings in about 20-30K a year and I'm wondering if next year's taxes will look different.

On a personal level, living in a no income tax state, two kids under 17 in private school, going down to 24% bracket, we are the probably the perfect storm (for once!) for this bill. Our estimated savings are around $8500 for next year.

KATNYC
Posts: 480
Joined: Fri Apr 07, 2017 4:34 pm

Re: Tax Bill Omnibus Thread

Post by KATNYC » Wed Dec 20, 2017 2:33 pm

We want to prepay our 2018 real estate taxes this month but need to hear back from the accountant since we pay taxes through a monthly fee to our building management in NYC. We also asked our own accountant how to accomplish this and are waiting to hear back. With the $10,000 SALT/Property tap cap we need to make adjustments now. We may just send the payment, estimated, and see how they can figure it out for the 1098.

For 2016 we had about $30,000 in itemized deductions including exemptions, unreimbursed job expenses, charitable contributions, state & local taxes, HELOC interest. HELOC interest isn't deductible anymore but we already refinanced into a 10/1 ARM mortgage at 3.375%

We already have a pass thru partnership for our small home-based business.

ETA: The accountant says we cannot do this; however, since several residents have inquired he will discuss it with the Board.
The management company collects taxes through monthly fees on an accrual basis.
Last edited by KATNYC on Wed Dec 20, 2017 3:37 pm, edited 1 time in total.

rrouse
Posts: 69
Joined: Sat Dec 20, 2014 7:26 am

Re: Tax Bill Omnibus Thread

Post by rrouse » Wed Dec 20, 2017 2:34 pm

Silk McCue wrote:
Wed Dec 20, 2017 2:03 pm
Diogenes wrote:
Wed Dec 20, 2017 1:34 pm
Re: Calculators for the Tax Reduction and Jobs Act
Anyone know of a good two-year comparison calculator of the tax bill before and after the new Act?
I tried one on Marketwatch (below) and it appears I'll be getting a significant reduction, but I want to cross-check it and compare 2017/2018 side by side. Also tried the taxplancalculator.com site above, but since I've never heard of the author...
https://www.marketwatch.com/story/the-n ... 2017-10-26
I ran the taxplancalculator.com tool and compared it against my own excel spreadsheet that I built for this whatif purpose.
Married Filing Jointly, no children, Florida, standard deduction - Identical results produced from both my spreadsheet and the online calculator.
Do you know if it (and your spreadsheet) accounts for AMT?

harikaried
Posts: 1295
Joined: Fri Mar 09, 2012 3:47 pm

Re: Tax Bill Omnibus Thread

Post by harikaried » Wed Dec 20, 2017 2:35 pm

Houe wrote:
Wed Dec 20, 2017 2:17 pm
I believe only paying home school expenses with 529 was eliminated. Paying private grade school expenses with 529 funds remained in the bill. That's how I understand it. Can someone confirm?
I believe that's correct, but to make it a bit more complicated, some states (apparently currently not Texas which Senator Cruz represents and pushed for 529s used towards home schooling) consider home schooling as private schools, which are covered by the new rules for 529s.

mrc
Posts: 1401
Joined: Sun Jan 10, 2016 6:39 am

Re: Tax Bill Omnibus Thread

Post by mrc » Wed Dec 20, 2017 2:37 pm

TG2 wrote:
Wed Dec 20, 2017 2:26 pm
The problem though is that your state or county has to allow the prepayment of property tax. I was getting all ready to go in and give them a $10,000 check to prepay 2018 property taxes but then checked the county website. Washington state law prohibits the payment of property tax in a year before it is due, so I'm stuck with semi-annual payments and cannot bunch the deduction. Everyone needs to check their own locality before attempting this.
I bet that is quite common. From my county website:
Can I prepay my taxes for next year?

No. Since each levy year has its own tax bill, and tax bills are not prepared until July of the year in which they are due, payments cannot be made and posted to your account prior to that date.
Macs are for those who don’t want to know why their computer works | Linux is for those who do | DOS is for those who want to know why their computer doesn’t work | Windows is for those who don’t

User avatar
Steelersfan
Posts: 3771
Joined: Thu Jun 19, 2008 8:47 pm

Re: Tax Bill Omnibus Thread

Post by Steelersfan » Wed Dec 20, 2017 2:37 pm

KlangFool wrote:
Wed Dec 20, 2017 1:50 pm
Folks,

As per my understanding, I should donate to the charity now for whatever amount that I budgeted for next year. This is true if my total itemized deduction for 2018 will not exceed the new standard deduction limit.

Please confirm.

KlangFool
That's what I did and why I did it.

harikaried
Posts: 1295
Joined: Fri Mar 09, 2012 3:47 pm

Re: Tax Bill Omnibus Thread

Post by harikaried » Wed Dec 20, 2017 2:38 pm

KlangFool wrote:
Wed Dec 20, 2017 2:04 pm
If the personal exemption is suspended, what is the tax benefit of claiming my children as the dependent? Please enlightened me.
Instead of a ~$4000 exemption, which reduces taxes by $1000 at 25% marginal rate, you get $2000 child tax credit, so roughly $1000 less in income taxes per child.

mikep
Posts: 3700
Joined: Wed Apr 22, 2009 9:27 pm

Re: Tax Bill Omnibus Thread

Post by mikep » Wed Dec 20, 2017 2:40 pm

Nate79 wrote:
Wed Dec 20, 2017 1:55 pm
Drew31 wrote:
Wed Dec 20, 2017 1:53 pm
Will be paying Jan and Feb mortgage payments this month. Doesn't look like I'll be itemizing any longer.
I would suggest to check with your mortgage company whether they will report the interest for those payments in 2017 or 2018.
I think you can only do Jan by the end of the year. Interest must be paid in the year accrued.. January is actually interest for the months of December so that's the only one that can be moved.

However if I am wrong and you can do Feb.. why stop there? Why not go all the way to Dec or even longer?
Last edited by mikep on Wed Dec 20, 2017 2:40 pm, edited 1 time in total.

KlangFool
Posts: 14688
Joined: Sat Oct 11, 2008 12:35 pm

Re: Tax Bill Omnibus Thread

Post by KlangFool » Wed Dec 20, 2017 2:40 pm

Folks,

Pardon my ignorance, my kids are in college. They are more than 17 years old and less than 24 years old. They are my dependents. If I meet the income limit, can I claim the child tax credits?

KlangFool

NotWhoYouThink
Posts: 2807
Joined: Fri Dec 26, 2014 4:19 pm

Re: Tax Bill Omnibus Thread

Post by NotWhoYouThink » Wed Dec 20, 2017 2:41 pm

harikaried wrote:
Wed Dec 20, 2017 2:38 pm
KlangFool wrote:
Wed Dec 20, 2017 2:04 pm
If the personal exemption is suspended, what is the tax benefit of claiming my children as the dependent? Please enlightened me.
Instead of a ~$4000 exemption, which reduces taxes by $1000 at 25% marginal rate, you get $2000 child tax credit, so roughly $1000 less in income taxes per child.
Or a flat $0 for children 17 and older

Post Reply