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
ryman554
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Re: Tax Bill Omnibus Thread

Post by ryman554 » Thu Dec 21, 2017 5:23 pm

Da5id wrote:
Thu Dec 21, 2017 10:42 am
BackOfTheNet wrote:
Thu Dec 21, 2017 10:34 am
Da5id wrote:
Thu Dec 21, 2017 10:32 am
Unless you have an interest only loan, 4% of 400k mortgage isn't 16K interest. A chunk of that is principle...
His payment might be higher than $16k but a 4% loan on a $400k mortgage is roughly $16k interest.
Interest on the very first payment of a 30 year 400K loan is indeed 16K, my bad. But it falls from there (though interest is front loaded).
Interest is *not* front-loaded. Interest declines over time because the principle balance declines every month. That's why paying down a loan accelerates the payoff date. It does has the effect of reducing the percentage of interest for each payment, but the interest itself is a result solely of remaining principle, not any sort of nefarious "pay interest first" scam.

Imagine the alternative, where you payoff $1111 of principle each month. The result would be a $2444 payment on month 1, down to a $1115 payment on month 360. Is interest front-loaded here?

Alan S.
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Re: Tax Bill Omnibus Thread

Post by Alan S. » Thu Dec 21, 2017 5:23 pm

fantasytensai wrote:
Thu Dec 21, 2017 5:11 pm
I usually calculate my withholdings to owe close to no taxes when filing. In fact, my 2017 NY state tax withholdings will be coming in a little short according to my calculations. It will only be short by about 1 to 2 thousand dollars (max). Should I pay $2,000 to my 2017 Q4 taxes before 12/31/2017 so I can deduct $2,000 more for my 2017 federal taxes? I assume that whatever amount I overpay will just be refunded to me? How will that implicate the $2,000 I deducted?
It will not change the amount you deducted, but you will get a 1099G reporting the SIT refund and will have to add that amount to your 2018 income to the extent the amount refunded increased your allowed federal deduction. This can be complex because you can deduct the higher of either your SIT or your sales tax. If your sales tax deduction would be more than your SIT deduction after reducing for the refund, you can switch to sales tax and only report the difference as income on your 2018 return. I suppose given the December tax savings moves to accelerate deductions into 2017, the IRS will be looking for 1099G forms to generate additional 2018 income.

KATNYC
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Re: Tax Bill Omnibus Thread

Post by KATNYC » Thu Dec 21, 2017 5:26 pm

Phil1234 wrote:
Thu Dec 21, 2017 5:18 pm
KATNYC wrote:
Thu Dec 21, 2017 4:57 pm
Phil1234 wrote:
Thu Dec 21, 2017 4:21 pm
perl wrote:
Thu Dec 21, 2017 2:15 am
Can someone clarify the times rules on home equity loan interest deductibility? Is it completely removed, or still deductible if used for home improvements?
Did this get answered? I am wondering this as well. The kitces article linked previously makes it seem like if the home equity loans or lines-of-credit was used for home improvements, it would still be deductible. But I haven't seen that distinction other places.

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


Totally disallowed.In the case of taxable years beginning after December 31, 2017, and before January 1, 2026—
‘‘(I) DISALLOWANCE OF HOME EQUITY INDEBTEDNESS INTEREST

https://www.scribd.com/document/3672840 ... l-tax-bill




Conference Agreement
The conference agreement provides that, in the case of taxable years beginning after December 31, 2017, and beginning before January 1, 2026, a taxpayer may treat no more than $750,000 as acquisition indebtedness ($375,000 in the case of married taxpayers filing separately). In the case of acquisition indebtedness incurred before December 15, 2017 this limitation is $1,000,000 ($500,000 in the case of married taxpayers filing separately).

For taxable years beginning after December 31, 2025, a taxpayer may treat up to $1,000,000 ($500,000 in the case of married taxpayers filing separately) of indebtedness as acquisition indebtedness, regardless of when the indebtedness was incurred.

Additionally, the conference agreement suspends the deduction for interest on home equity indebtedness. Thus, for taxable years beginning after December 31, 2017, a taxpayer may not claim a deduction for interest on home equity indebtedness. The suspension ends for taxable years beginning after December 31, 2025.
Right, but if you look at the definition of "Acquisition indebtedness", it would cover indeptedness used to "substantially improve a qualified residence of the taxpayer which secures the residence." So even though it is a home equity loan or LOC, if it is used for home improvements, the interest may still be deductible if under the limits. That is what the kitces article states. It doesn't matter if it the debt is a home equity loan or line of credit, instead what it is used for. But maybe it is not correct. That is the question.

Below is from the bill.
"Acquisition indebtedness is indebtedness that is incurred in acquiring, constructing, or substantially improving a qualified residence of the taxpayer and which secures the residence"
I cannot locate a definitive answer. I will ask a tax lawyer.
It appears to close the loophole to get tax-deductible money to buy things unrelated to the home.

Da5id
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Re: Tax Bill Omnibus Thread

Post by Da5id » Thu Dec 21, 2017 5:37 pm

ryman554 wrote:
Thu Dec 21, 2017 5:23 pm
Da5id wrote:
Thu Dec 21, 2017 10:42 am
BackOfTheNet wrote:
Thu Dec 21, 2017 10:34 am
Da5id wrote:
Thu Dec 21, 2017 10:32 am
Unless you have an interest only loan, 4% of 400k mortgage isn't 16K interest. A chunk of that is principle...
His payment might be higher than $16k but a 4% loan on a $400k mortgage is roughly $16k interest.
Interest on the very first payment of a 30 year 400K loan is indeed 16K, my bad. But it falls from there (though interest is front loaded).
Interest is *not* front-loaded. Interest declines over time because the principle balance declines every month. That's why paying down a loan accelerates the payoff date. It does has the effect of reducing the percentage of interest for each payment, but the interest itself is a result solely of remaining principle, not any sort of nefarious "pay interest first" scam.

Imagine the alternative, where you payoff $1111 of principle each month. The result would be a $2444 payment on month 1, down to a $1115 payment on month 360. Is interest front-loaded here?
Distinction without a difference. You pay a constant amount every month. A higher proportion of your payment is interest at the beginning. Allow me to refer you to the dictionary, I don't believe what I said is in any way wrong, and moreover it was in context entirely clear.

front-load
verb
past tense: front-loaded; past participle: front-loaded
distribute or allocate (costs, effort, etc.) unevenly, with the greater proportion at the beginning of an enterprise or process.

technovelist
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Re: Tax Bill Omnibus Thread

Post by technovelist » Thu Dec 21, 2017 5:55 pm

1210sda wrote:
Thu Dec 21, 2017 10:11 am
I'm looking for a tax calculator that takes into account Qualified Dividend Income and LT Cap Gains.

Any Suggestions

1210
Don't the standard tax programs like H&R Block do that?
In theory, theory and practice are identical. In practice, they often differ.

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vitaflo
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Re: Tax Bill Omnibus Thread

Post by vitaflo » Thu Dec 21, 2017 6:05 pm

Should be obvious, but anyone who owns a business (including self-employed people) should be front-loading as many expenses as they can before year end. I've been stocking up on various office supplies and pre-paying many years worth of fees for vendor services as I am able to. You will get the best bang for the buck if you load up as much as you can this year. Go through your old expense reports for ideas of what to purchase.

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sperry8
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Re: Tax Bill Omnibus Thread

Post by sperry8 » Thu Dec 21, 2017 6:08 pm

The deduction for state and local income, sales and property taxes is capped at $10,000. When does this start? 2017 or 2018?
Humbling BH contest results: 2017: #516 of 647 | 2016: #121 of 610 | 2015: #18 of 552 | 2014: #225 of 503 | 2013: #383 of 433 | 2012: #366 of 410 | 2011: #113 of 369 | 2010: #53 of 282

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DaftInvestor
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Re: Tax Bill Omnibus Thread

Post by DaftInvestor » Thu Dec 21, 2017 6:10 pm

Da5id wrote:
Thu Dec 21, 2017 11:30 am
mega317 wrote:
Thu Dec 21, 2017 10:53 am
KATNYC wrote:
Thu Dec 21, 2017 10:40 am
forcing many of us to scramble
To be fair no one is forcing us to do these little tax tricks.
Last minute changes in "the rules" do make life difficult. Nobody is forced to do anything. But those who want to take all reasonable steps minimize taxes (which is many bogleheads) some scrambling is going on.

e.g. I just went and paid for property tax for first half of 2018. Hope that ends up working (as many articles have suggested), as I'm itemizing this year and not next. Worst case I'm out the interest on that money for 6 months, I'll live. Best case save a few thousand dollars, not pocket change. Only other hoop I'm considering is generously paying my Q4 estimated tax before Dec 31, and perhaps accelerating a charitable contribution.
Unfortunately my town provides no way of pre-payig property taxes- I asked (and if I just send a check they will return it - can't match it to any payments until they generate billing in Jan). ... so no tricks available for me (unless I prepay charitable for next year).

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DaftInvestor
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Re: Tax Bill Omnibus Thread

Post by DaftInvestor » Thu Dec 21, 2017 6:11 pm

sperry8 wrote:
Thu Dec 21, 2017 6:08 pm
The deduction for state and local income, sales and property taxes is capped at $10,000. When does this start? 2017 or 2018?
2018

MikeG62
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Re: Tax Bill Omnibus Thread

Post by MikeG62 » Thu Dec 21, 2017 6:12 pm

chw wrote:
Thu Dec 21, 2017 5:21 pm
The Wizard wrote:
Thu Dec 21, 2017 5:00 pm
chw wrote:
Thu Dec 21, 2017 3:45 pm

...Prepaid remaining 2017 real estate taxes. 3rd and 4th quarter bills are available (tax collector emailed me the bill being mailed next week), but not past due until 2/1/2018, and 5/1/2018 (live in MA). The deduct-ability of this prepayment appears to be a gray area at this time, but figured even if not allowed as a deduction, I won't be deducting real estate taxes payments next year anyways...
Not a gray area for me at all.
My property tax bill is labeled Fiscal 2018 and I already paid the first two quarterly payments due 8/1 and 11/1. Then this morning I paid the 2/1 and 5/1 amounts.
So I'll have a nice refund coming in the spring for my last year of itemizing federal taxes...
I tend to agree. The fact that the bills became available this week, and the Collector accepted the payments sealed the deal for me. I hadn't fully read the IRS publication about real estate tax prepayments, so wanted to confirm. Also, Congress mentioned last night they weren't allowing prepayment of real estate taxes due in 2018 as an itemized deduction in 2017. Since our 3rd and 4th quarter fiscal year 2018 bills aren't due until 2018, I was going to research this a bit further before filing my taxes next year. The "gray" to me was that they are fiscal year 2018 payments due in 2018. Since the Town had the bill available to pay however, and accepted the payments seems to hopefully indicate may be able to take the deduction. Fingers crossed...
chw, Can you elaborate on this. First I heard of congress addressing this issue at all. Do you have a link you can share or other details so we all can benefit from this.
Last edited by MikeG62 on Thu Dec 21, 2017 6:26 pm, edited 1 time in total.
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Watty
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Re: Tax Bill Omnibus Thread

Post by Watty » Thu Dec 21, 2017 6:13 pm

KATNYC wrote:
Thu Dec 21, 2017 2:39 pm
darrvao777 wrote:
Thu Dec 21, 2017 1:42 pm
Gleevec wrote:
Thu Dec 21, 2017 1:02 pm
So for those of us with "side hustle" 1099 income (eg solo consulting, separate from our W2 day job wages) who are excluded from pass through tax relief, does it make any sense to become a C-corp?
And to expand on this further, is there a way to become a C-corp and convert our W2 day job wages? Or is this not an option for employees?
found this:

1) Incorporate yourself
Under the new law, the top ordinary rate on labor income will be much higher than the top rate on corporate income. As a result, many taxpayers will be able to shield a portion of their labor income from tax by setting up a corporation. So Joe Smith, previously an assistant account director for a PR firm, can become Joe Smith, Inc., a new startup company! The firm makes payments to the new corporation instead of to Smith. Thus, Smith shields his labor income from the higher individual tax rate.

The IRS might investigate whether the new corporation pays Smith a reasonable fee for his services, which some tax-law precedents suggest it is obliged to. That’s one check against this tax dodge, and there could be others. But how many new corporations can the IRS investigate? And if Smith can find a few friends to join his new corporation, it will be even harder for the IRS to challenge.

3) Take your job and shove it (and create a pass-through)
As mentioned, under current rules people who earn income via a pass-through business pay tax at the individual rates. But under the Republican bill they first get to deduct part of this income. That means — surprise! — new pass-throughs will blossom as more taxpayers will redefine their work as a business instead of a mere wage-earning job.

Many independent contractors and members of a partnership automatically qualify for pass-through status. So expect to see workers giving their bosses two weeks’ notice and reentering the workforce as independent contractors and partners in their own firms.

https://www.vox.com/the-big-idea/2017/1 ... ccountants
The uncertainty of the healthcare situation that the contractor would need to buy on their own would be a deterrent. Things like giving up a 401k match, stock options, bonuses, etc would also be a barrier to changing to be a contractor. Many contractors are also paid hourly so how to handle things like expected overtime would also be an issue.

Before I retired I was a software developer and there are also a lot of contractors that do that but one concern for them is the liability issues. I was always an employee so if there was a bug in my code it would have been next to impossible for me to be sued for that but a contractor could be sued in some situations so they would likely need professional liability insurance since an LLC is not always enough protection. Over my career I worked on software that involved medical systems, pharmaceuticals, food that had strict recall requirements, and other things like industrial supplies that could result in injury to people if there was a computer error so there is a LOT of potential liability for a contractor.

I have no doubt that it will happen some but probably not too much for your typical megacorp employee.

betablocker
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Re: Tax Bill Omnibus Thread

Post by betablocker » Thu Dec 21, 2017 6:27 pm

VictoriaF wrote:
Thu Dec 21, 2017 4:43 pm
siamond wrote:
Thu Dec 21, 2017 4:32 pm
betablocker wrote:
Thu Dec 21, 2017 4:10 pm
Seems like most people's posts are getting lost on the thread given all the disparate topics: effects on SALT, for pass through owner, real estate, muni treatment, etc. I'm not sure what difference it makes having one versus 10 threads but it's not my board so not my rules.
Agreed, this kind of arbitrary limitation is quite silly.
I have spent several hours yesterday and additional several hours today reading this entire thread. I bookmarked it and when I click on my "Notifications" it takes me to the first post I have not seen.

While most discussions do not apply to my case, I still find it useful to read everything in the Omnibus on the new tax bill for the reasons as follows:
1. The Bogleheads are very good in bringing up issues that nobody else has thought of.
2. If we had several threads instead of this Omnibus, I would have likely skipped some of them as irrelevant to me.
3. Now, that I've read everything, a variety of topics is stored in the back of my mind. If my financial situation and considerations change, I will have a trigger to look relevant information up.

Victoria
I’m glad it is working for you. My point is many posts about specific topics aren’t getting attention in the overwhelming stream of posts. I can’t really follow it so I guess i’ll exit this topic until January.

retiredjg
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Re: Tax Bill Omnibus Thread

Post by retiredjg » Thu Dec 21, 2017 6:35 pm

betablocker wrote:
Thu Dec 21, 2017 6:27 pm
I’m glad it is working for you. My point is many posts about specific topics aren’t getting attention in the overwhelming stream of posts. I can’t really follow it so I guess i’ll exit this topic until January.
I understand your thoughts and have come to a similar conclusion, but also see this from the owner's/admins/moderator's viewpoint.

I think exiting until January will mean it is better not to read it at all. The best way to keep up with this thread is to read it several times a day and only scan the parts that are not important to you at this time. Reading it in it's entirety next year will be a chore and probably very unproductive in my opinion.

BAM!
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Prepaying property taxes in 2017

Post by BAM! » Thu Dec 21, 2017 6:35 pm

I heard that you can prepay your property taxes for a 2018 in 2017. This would be beneficial in the sense that you could deduct the prepaid 2018 property taxes in your 2017 tax year. This could be helpful for minimizing your tax liability under the new Trump legislation. However I have also heard that if you have to pay AMT, then this strategy might not be beneficial. Can someone please explain how paying AMT wood cancel out the strategy and make it not beneficial. Thank you

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vitaflo
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Re: Tax Bill Omnibus Thread

Post by vitaflo » Thu Dec 21, 2017 6:38 pm

Watty wrote:
Thu Dec 21, 2017 6:13 pm
The uncertainty of the healthcare situation that the contractor would need to buy on their own would be a deterrent. Things like giving up a 401k match, stock options, bonuses, etc would also be a barrier to changing to be a contractor. Many contractors are also paid hourly so how to handle things like expected overtime would also be an issue.

Before I retired I was a software developer and there are also a lot of contractors that do that but one concern for them is the liability issues. I was always an employee so if there was a bug in my code it would have been next to impossible for me to be sued for that but a contractor could be sued in some situations so they would likely need professional liability insurance since an LLC is not always enough protection. Over my career I worked on software that involved medical systems, pharmaceuticals, food that had strict recall requirements, and other things like industrial supplies that could result in injury to people if there was a computer error so there is a LOT of potential liability for a contractor.

I have no doubt that it will happen some but probably not too much for your typical megacorp employee.
Normally contractors have higher hourly rates to make up for these issues. Without them it would make no sense to be a contractor.

That said the 20% deduction makes the math easier, but the most curious thing to me is how it affects contractor rates. My guess is with the tax cut for pass-throughs it will push down rates. I suspect only those who have been in the game for a while and have large networks and solid client relationships will be able to maintain their current rates. New entrants into contracting will most likely not see the rates us old hats have become used to.

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1210sda
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Re: Tax Bill Omnibus Thread

Post by 1210sda » Thu Dec 21, 2017 6:39 pm

technovelist wrote:
Thu Dec 21, 2017 5:55 pm
1210sda wrote:
Thu Dec 21, 2017 10:11 am
I'm looking for a tax calculator that takes into account Qualified Dividend Income and LT Cap Gains.

Any Suggestions

1210
Don't the standard tax programs like H&R Block do that?
Sorry, I wasn't clear. I want one to estimate 2018 taxes under the new tax bill.

Every calculator for the tax bill that I've seen does not use QDI or CG income.

1210

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Ketawa
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Re: Tax Bill Omnibus Thread

Post by Ketawa » Thu Dec 21, 2017 6:40 pm

an_asker wrote:
Thu Dec 21, 2017 4:07 pm
Ketawa wrote:
Thu Dec 21, 2017 3:49 pm
IMO wrote:
Thu Dec 21, 2017 2:34 pm
In not in any way a tax professional, but there seems to be the thought by some that if one prepays their mortgage payments now for 2018 and even further, say 2019, that they can use that interest they are prepaying to their advantage for itemizing.

I just don't believe that is legitimate. I'd consult one's tax professional before considering that.

IRS publication 936 states:

"Prepaid interest.
If you pay interest in advance for a period that goes beyond the end of the tax year, you must spread this interest over the tax years to which it applies. You can deduct in each year only the interest that qualifies as home mortgage interest for that year. However, there is an exception that applies to points, discussed later. "
I was about to post this also.
an_asker wrote:
Thu Dec 21, 2017 2:38 pm
I definitely don't know how you can prepay interest for 2019! But when advantageous, I do (and did, earlier today) pay the mortgage payment due 1/1.
This has no effect on your taxes. Mortgage interest is paid in arrears. Your payment due in January is for December's interest. This is also how it is reported on a 1098. (Edit - I think. I have to go back and look at my records.)
I am pretty sure all interest payment amounts paid from 1/1 to 12/31 are included in the 1098 (even though I probably need to go back and double check my records, as I have done this only ONCE!!). I am pretty sure I read about this in multiple sources - print as well as blogs - and it is legitimate (up to the first payment of the next year, that is, as long as the payments are all in the same calendar year).
Yeah, I was wrong about the 1098. My 1098s show interest paid in the year the payment was made, not when the interest accrued. I can't really parse this sentence though:

"If you prepaid interest in 2017 that accrued in full by January 15, 2018, this prepaid interest may be included in box 1 of Form 1098. However, you cannot deduct the prepaid amount for January 2018 in 2017."


Mortgage interest is typically paid in arrears. For example, the mortgage statement my lender sent me on August 18, 2017 had interest for the month of August, and was due September 1, 2017. Add onto that due date a lender-allowed 10 day grace period. So if I had not sold my home, I would be pondering this same question.

I could have made my January 2018 payment in December 2017. The January 2018 payment covers interest for December 2017. Is this not "prepaid interest that accrued in full by January 15, 2018", and therefore not deductible in 2017? Or is it not considered prepaid since I would have had my statement in hand?

Bacchus01
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Re: Tax Bill Omnibus Thread

Post by Bacchus01 » Thu Dec 21, 2017 6:51 pm

betablocker wrote:
Thu Dec 21, 2017 6:27 pm
VictoriaF wrote:
Thu Dec 21, 2017 4:43 pm
siamond wrote:
Thu Dec 21, 2017 4:32 pm
betablocker wrote:
Thu Dec 21, 2017 4:10 pm
Seems like most people's posts are getting lost on the thread given all the disparate topics: effects on SALT, for pass through owner, real estate, muni treatment, etc. I'm not sure what difference it makes having one versus 10 threads but it's not my board so not my rules.
Agreed, this kind of arbitrary limitation is quite silly.
I have spent several hours yesterday and additional several hours today reading this entire thread. I bookmarked it and when I click on my "Notifications" it takes me to the first post I have not seen.

While most discussions do not apply to my case, I still find it useful to read everything in the Omnibus on the new tax bill for the reasons as follows:
1. The Bogleheads are very good in bringing up issues that nobody else has thought of.
2. If we had several threads instead of this Omnibus, I would have likely skipped some of them as irrelevant to me.
3. Now, that I've read everything, a variety of topics is stored in the back of my mind. If my financial situation and considerations change, I will have a trigger to look relevant information up.

Victoria

I’m glad it is working for you. My point is many posts about specific topics aren’t getting attention in the overwhelming stream of posts. I can’t really follow it so I guess i’ll exit this topic until January.
Which ones aren’t getting attention?

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catdude
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Re: Prepaying property taxes in 2017

Post by catdude » Thu Dec 21, 2017 6:55 pm

Bogleheads are all over this! Check out the omnibus tax thread here...

viewtopic.php?f=2&t=235146
catdude | | All generalizations are false, including this one.

RetiredAL
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Re: Tax Bill Omnibus Thread

Post by RetiredAL » Thu Dec 21, 2017 7:00 pm

RudyS wrote:
Wed Dec 20, 2017 5:24 pm
I have seen no mention of the QCD (qualified charitable deduction) for 2018. Does this mean it remains in place? Hoping!
Per Ed Slott -- "Yes, Qualified Charitable Distributions (QCDs) remain available under the new law. In fact, it may make them more popular than before." Posted 12/21/2017.

https://www.irahelp.com/slottreport/tax ... qa-mailbag

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dm200
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Prepaying property tax in 2017

Post by dm200 » Thu Dec 21, 2017 7:13 pm

Different answers in different area localities

https://www.washingtonpost.com/local/md ... 6fc00c1c7b

Drew31
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Re: Tax Bill Omnibus Thread

Post by Drew31 » Thu Dec 21, 2017 7:18 pm

VictoriaF wrote:
Thu Dec 21, 2017 4:43 pm
siamond wrote:
Thu Dec 21, 2017 4:32 pm
betablocker wrote:
Thu Dec 21, 2017 4:10 pm
Seems like most people's posts are getting lost on the thread given all the disparate topics: effects on SALT, for pass through owner, real estate, muni treatment, etc. I'm not sure what difference it makes having one versus 10 threads but it's not my board so not my rules.
Agreed, this kind of arbitrary limitation is quite silly.
I have spent several hours yesterday and additional several hours today reading this entire thread. I bookmarked it and when I click on my "Notifications" it takes me to the first post I have not seen.

While most discussions do not apply to my case, I still find it useful to read everything in the Omnibus on the new tax bill for the reasons as follows:
1. The Bogleheads are very good in bringing up issues that nobody else has thought of.
2. If we had several threads instead of this Omnibus, I would have likely skipped some of them as irrelevant to me.
3. Now, that I've read everything, a variety of topics is stored in the back of my mind. If my financial situation and considerations change, I will have a trigger to look relevant information up.

Victoria
Agreed. Finding everything together very helpful to read thru and consider anything I may not be thinking of. It's obviously quite a lot to try to take in and absorb, but just keeping a page open and bookmarked and working through as I have time.

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hoppy08520
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Re: Tax Bill Omnibus Thread

Post by hoppy08520 » Thu Dec 21, 2017 7:23 pm

Glad I'm reading this thread.

Like many people, I make various charitable donations that are be deductible. In 2017 and earlier, my spouse and I (MFJ) were itemizers, but starting with 2018, I forecast that we will be right on the edge of itemizing vs taking the almost-doubled standard deduction.

Therefore, I think we will start bunching our charitable donations every other year, to be able to itemize to our benefit in the years that we make the donations, and on the off years, take the standard deduction.

I was going to make a large (for me) charitable gift at the end of this year, but with the higher standard deduction for the 2018 tax year, I'll wait until early 2019.

I'm also going to see if I can pre-pay my 2018 county property taxes before the end of the year, since we are over the $10,000 SALT cap. If I can manage to make this happen, that alone will save me around $2,000 in taxes

mffl
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Re: Tax Bill Omnibus Thread

Post by mffl » Thu Dec 21, 2017 7:24 pm

Drew31 wrote:
Thu Dec 21, 2017 7:18 pm
VictoriaF wrote:
Thu Dec 21, 2017 4:43 pm
siamond wrote:
Thu Dec 21, 2017 4:32 pm
betablocker wrote:
Thu Dec 21, 2017 4:10 pm
Seems like most people's posts are getting lost on the thread given all the disparate topics: effects on SALT, for pass through owner, real estate, muni treatment, etc. I'm not sure what difference it makes having one versus 10 threads but it's not my board so not my rules.
Agreed, this kind of arbitrary limitation is quite silly.
I have spent several hours yesterday and additional several hours today reading this entire thread. I bookmarked it and when I click on my "Notifications" it takes me to the first post I have not seen.

While most discussions do not apply to my case, I still find it useful to read everything in the Omnibus on the new tax bill for the reasons as follows:
1. The Bogleheads are very good in bringing up issues that nobody else has thought of.
2. If we had several threads instead of this Omnibus, I would have likely skipped some of them as irrelevant to me.
3. Now, that I've read everything, a variety of topics is stored in the back of my mind. If my financial situation and considerations change, I will have a trigger to look relevant information up.

Victoria
Agreed. Finding everything together very helpful to read thru and consider anything I may not be thinking of.
Yes, and honestly I'm just beyond grateful we got our one thread at all. Our kind hosts didn't have to make the exception to a clear and long-standing rule, but we begged nicely and got this compromise. Fortunately, most of us have been good and kept the politicking out of it. :)

This thread has helped me quite a bit, even if I did have to run through a bunch of stuff that didn't apply to me. Frankly, everything is so new, I don't yet know what does and doesn't apply to me. It is quite the effort to keep up with the thread though, I'll admit.

This thread plus that kitces article are pure gold.

ConcernedKid
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Re: Tax Bill Omnibus Thread

Post by ConcernedKid » Thu Dec 21, 2017 7:27 pm

If anyone is considering going the indy contractor route make sure you will not need a loan over the next 1-2 years. Most mortgage companies require one to two years of taxes post self-employment. Also have a back up plan for insurance. If you have access to a spouse's health insurance, that's probably ideal. The exchanges look pretty precarious for 2019 with the repeal of the individual mandate and the failure to pay CSRs.

Pros to Indy Contractor Status: Solo 401k availability with higher contribution limits (not necessarily the case if your employer allows after tax contributions), tax deductions for meals (not entertainment in 2018), the ability to get a HSA eligible health care plan, the ability to turn vacations into tax deductible expenses, being able to sign up for business credit cards, home office deduction potential, and the 20% pass through deduction if your taxable income is below the phase out limits.

Cons to Indy Contractor Status: SE tax on 15.3% of gross proceeds (1/2 is tax deductible), it will be very difficult to qualify for loans without an extensive paper trail, uneven payments, expensive liability insurance, paying quarterly estimated taxes (it is good for credit card sign up bonuses though), limited options for health care, potential less protected status with an employer, less stability.

As with all things, YMMV.

jebmke
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Re: Prepaying property tax in 2017

Post by jebmke » Thu Dec 21, 2017 7:27 pm

My MD county won't take the money. They have no way to match it anywhere so they would return the check if I sent it to them.
When you discover that you are riding a dead horse, the best strategy is to dismount.

chw
Posts: 478
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Re: Tax Bill Omnibus Thread

Post by chw » Thu Dec 21, 2017 7:30 pm

MikeG62 wrote:
Thu Dec 21, 2017 6:12 pm
chw wrote:
Thu Dec 21, 2017 5:21 pm
The Wizard wrote:
Thu Dec 21, 2017 5:00 pm
chw wrote:
Thu Dec 21, 2017 3:45 pm

...Prepaid remaining 2017 real estate taxes. 3rd and 4th quarter bills are available (tax collector emailed me the bill being mailed next week), but not past due until 2/1/2018, and 5/1/2018 (live in MA). The deduct-ability of this prepayment appears to be a gray area at this time, but figured even if not allowed as a deduction, I won't be deducting real estate taxes payments next year anyways...
Not a gray area for me at all.
My property tax bill is labeled Fiscal 2018 and I already paid the first two quarterly payments due 8/1 and 11/1. Then this morning I paid the 2/1 and 5/1 amounts.
So I'll have a nice refund coming in the spring for my last year of itemizing federal taxes...
I tend to agree. The fact that the bills became available this week, and the Collector accepted the payments sealed the deal for me. I hadn't fully read the IRS publication about real estate tax prepayments, so wanted to confirm. Also, Congress mentioned last night they weren't allowing prepayment of real estate taxes due in 2018 as an itemized deduction in 2017. Since our 3rd and 4th quarter fiscal year 2018 bills aren't due until 2018, I was going to research this a bit further before filing my taxes next year. The "gray" to me was that they are fiscal year 2018 payments due in 2018. Since the Town had the bill available to pay however, and accepted the payments seems to hopefully indicate may be able to take the deduction. Fingers crossed...
chw, Can you elaborate on this. First I heard of congress addressing this issue at all. Do you have a link you can share or other details so we all can benefit from this.
Mike, I found this article from CNBC mentioning the Congress bill limit regarding prepaying 2018 SALT taxes: https://www.cnbc.com/2017/12/18/prepayi ... -bill.html . I actually heard about the limits on 2 or 3 local or national broadcasts this week.

mffl
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Re: Tax Bill Omnibus Thread

Post by mffl » Thu Dec 21, 2017 7:35 pm

http://thehill.com/homenews/administrat ... ill-friday

The reason for the President to delay signing the bill until January appears to have evaporated. Looks like they exempted the bill from PAYGO rules as part of the deal to avoid a shutdown. Therefore it's possible tomorrow we may be operating under standard forum rules.

Regardless, the extra couple days to discuss has been important for many of us in this end of year crunch time!

MikeG62
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Location: New Jersey

Re: Tax Bill Omnibus Thread

Post by MikeG62 » Thu Dec 21, 2017 7:37 pm

chw wrote:
Thu Dec 21, 2017 7:30 pm
MikeG62 wrote:
Thu Dec 21, 2017 6:12 pm
chw wrote:
Thu Dec 21, 2017 5:21 pm
The Wizard wrote:
Thu Dec 21, 2017 5:00 pm
chw wrote:
Thu Dec 21, 2017 3:45 pm

...Prepaid remaining 2017 real estate taxes. 3rd and 4th quarter bills are available (tax collector emailed me the bill being mailed next week), but not past due until 2/1/2018, and 5/1/2018 (live in MA). The deduct-ability of this prepayment appears to be a gray area at this time, but figured even if not allowed as a deduction, I won't be deducting real estate taxes payments next year anyways...
Not a gray area for me at all.
My property tax bill is labeled Fiscal 2018 and I already paid the first two quarterly payments due 8/1 and 11/1. Then this morning I paid the 2/1 and 5/1 amounts.
So I'll have a nice refund coming in the spring for my last year of itemizing federal taxes...
I tend to agree. The fact that the bills became available this week, and the Collector accepted the payments sealed the deal for me. I hadn't fully read the IRS publication about real estate tax prepayments, so wanted to confirm. Also, Congress mentioned last night they weren't allowing prepayment of real estate taxes due in 2018 as an itemized deduction in 2017. Since our 3rd and 4th quarter fiscal year 2018 bills aren't due until 2018, I was going to research this a bit further before filing my taxes next year. The "gray" to me was that they are fiscal year 2018 payments due in 2018. Since the Town had the bill available to pay however, and accepted the payments seems to hopefully indicate may be able to take the deduction. Fingers crossed...
chw, Can you elaborate on this. First I heard of congress addressing this issue at all. Do you have a link you can share or other details so we all can benefit from this.
Mike, I found this article from CNBC mentioning the Congress bill limit regarding prepaying 2018 SALT taxes: https://www.cnbc.com/2017/12/18/prepayi ... -bill.html . I actually heard about the limits on 2 or 3 local or national broadcasts this week.
chw,

Thanks, I was aware of this one. It thankfully only applies to prepayment of state and local income taxes though. I have not seen anything which says this prohibition also applies to personal property taxes.
Real Knowledge Comes Only From Experience

SGM
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Re: Tax Bill Omnibus Thread

Post by SGM » Thu Dec 21, 2017 7:42 pm

I opened a DAF today. Hopefully the stock with long term capital gains of 450% will be in the charitable account by tomorrow.

Da5id
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Re: Tax Bill Omnibus Thread

Post by Da5id » Thu Dec 21, 2017 7:51 pm

MikeG62 wrote:
Thu Dec 21, 2017 7:37 pm
chw wrote:
Thu Dec 21, 2017 7:30 pm
Mike, I found this article from CNBC mentioning the Congress bill limit regarding prepaying 2018 SALT taxes: https://www.cnbc.com/2017/12/18/prepayi ... -bill.html . I actually heard about the limits on 2 or 3 local or national broadcasts this week.
chw,

Thanks, I was aware of this one. It thankfully only applies to prepayment of state and local income taxes though. I have not seen anything which says this prohibition also applies to personal property taxes.
Yeah, that cnbc article says at the end:
(Correction: A previous version of this story incorrectly stated that property taxes could not be prepaid.)

MikeG62
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Re: Tax Bill Omnibus Thread

Post by MikeG62 » Thu Dec 21, 2017 7:55 pm

Da5id wrote:
Thu Dec 21, 2017 7:51 pm
MikeG62 wrote:
Thu Dec 21, 2017 7:37 pm
chw wrote:
Thu Dec 21, 2017 7:30 pm
Mike, I found this article from CNBC mentioning the Congress bill limit regarding prepaying 2018 SALT taxes: https://www.cnbc.com/2017/12/18/prepayi ... -bill.html . I actually heard about the limits on 2 or 3 local or national broadcasts this week.
chw,

Thanks, I was aware of this one. It thankfully only applies to prepayment of state and local income taxes though. I have not seen anything which says this prohibition also applies to personal property taxes.
Yeah, that cnbc article says at the end:
(Correction: A previous version of this story incorrectly stated that property taxes could not be prepaid.)
Thanks.

Note to self, always read all the way to the end :oops:
Real Knowledge Comes Only From Experience

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Artsdoctor
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Re: Tax Bill Omnibus Thread

Post by Artsdoctor » Thu Dec 21, 2017 8:04 pm

vitaflo wrote:
Thu Dec 21, 2017 6:05 pm
Should be obvious, but anyone who owns a business (including self-employed people) should be front-loading as many expenses as they can before year end. I've been stocking up on various office supplies and pre-paying many years worth of fees for vendor services as I am able to. You will get the best bang for the buck if you load up as much as you can this year. Go through your old expense reports for ideas of what to purchase.
No, this is not necessarily true. Everyone needs to do their own math. I am firmly in the AMT sweet spot this year with a marginal rate of 28%. Next year, I will be firmly in the 35% marginal rate. I am certainly not deducting any more expenses in my S Corp (the touted pass-through bonanza will not help me) than I have to. Those expenses will be far more beneficial next year.

The majority of people I’ve talked to who have been paying AMT are not aware of that, so I would not make any generalities here.

SlowMovingInvestor
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Re: Tax Bill Omnibus Thread

Post by SlowMovingInvestor » Thu Dec 21, 2017 8:11 pm

chw wrote:
Thu Dec 21, 2017 7:30 pm
MikeG62 wrote:
Thu Dec 21, 2017 6:12 pm
chw wrote:
Thu Dec 21, 2017 5:21 pm
The Wizard wrote:
Thu Dec 21, 2017 5:00 pm
chw wrote:
Thu Dec 21, 2017 3:45 pm

...Prepaid remaining 2017 real estate taxes. 3rd and 4th quarter bills are available (tax collector emailed me the bill being mailed next week), but not past due until 2/1/2018, and 5/1/2018 (live in MA). The deduct-ability of this prepayment appears to be a gray area at this time, but figured even if not allowed as a deduction, I won't be deducting real estate taxes payments next year anyways...
Not a gray area for me at all.
My property tax bill is labeled Fiscal 2018 and I already paid the first two quarterly payments due 8/1 and 11/1. Then this morning I paid the 2/1 and 5/1 amounts.
So I'll have a nice refund coming in the spring for my last year of itemizing federal taxes...
I tend to agree. The fact that the bills became available this week, and the Collector accepted the payments sealed the deal for me. I hadn't fully read the IRS publication about real estate tax prepayments, so wanted to confirm. Also, Congress mentioned last night they weren't allowing prepayment of real estate taxes due in 2018 as an itemized deduction in 2017. Since our 3rd and 4th quarter fiscal year 2018 bills aren't due until 2018, I was going to research this a bit further before filing my taxes next year. The "gray" to me was that they are fiscal year 2018 payments due in 2018. Since the Town had the bill available to pay however, and accepted the payments seems to hopefully indicate may be able to take the deduction. Fingers crossed...
chw, Can you elaborate on this. First I heard of congress addressing this issue at all. Do you have a link you can share or other details so we all can benefit from this.
Mike, I found this article from CNBC mentioning the Congress bill limit regarding prepaying 2018 SALT taxes: https://www.cnbc.com/2017/12/18/prepayi ... -bill.html . I actually heard about the limits on 2 or 3 local or national broadcasts this week.
That article talks about State and Local, not property. It's possible other broadcast commentators are conflating these also, out of ignorance or a desire to simplify.

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htdrag11
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Re: Prepaying property tax in 2017

Post by htdrag11 » Thu Dec 21, 2017 8:14 pm

Here is a doubter from Morningstar interview:

http://beta.morningstar.com/videos/8414 ... s-Now.html

chw
Posts: 478
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Re: Tax Bill Omnibus Thread

Post by chw » Thu Dec 21, 2017 8:16 pm

MikeG62 wrote:
Thu Dec 21, 2017 7:55 pm
Da5id wrote:
Thu Dec 21, 2017 7:51 pm
MikeG62 wrote:
Thu Dec 21, 2017 7:37 pm
chw wrote:
Thu Dec 21, 2017 7:30 pm
Mike, I found this article from CNBC mentioning the Congress bill limit regarding prepaying 2018 SALT taxes: https://www.cnbc.com/2017/12/18/prepayi ... -bill.html . I actually heard about the limits on 2 or 3 local or national broadcasts this week.
chw,

Thanks, I was aware of this one. It thankfully only applies to prepayment of state and local income taxes though. I have not seen anything which says this prohibition also applies to personal property taxes.
Yeah, that cnbc article says at the end:
(Correction: A previous version of this story incorrectly stated that property taxes could not be prepaid.)
Thanks.

Note to self, always read all the way to the end :oops:
+1...

Carl53
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Re: Tax Bill Omnibus Thread

Post by Carl53 » Thu Dec 21, 2017 8:35 pm

hoppy08520 wrote:
Thu Dec 21, 2017 7:23 pm
Glad I'm reading this thread.

Like many people, I make various charitable donations that are be deductible. In 2017 and earlier, my spouse and I (MFJ) were itemizers, but starting with 2018, I forecast that we will be right on the edge of itemizing vs taking the almost-doubled standard deduction.

Therefore, I think we will start bunching our charitable donations every other year, to be able to itemize to our benefit in the years that we make the donations, and on the off years, take the standard deduction.

I was going to make a large (for me) charitable gift at the end of this year, but with the higher standard deduction for the 2018 tax year, I'll wait until early 2019.

I'm also going to see if I can pre-pay my 2018 county property taxes before the end of the year, since we are over the $10,000 SALT cap. If I can manage to make this happen, that alone will save me around $2,000 in taxes
You might still want to make the charitable gift this year. Unless your income is rising the lower brackets in 2018 and beyond will reduce the value of the later charitable deduction, not to mention that it is likely that more of the deduction will be wasted just overcoming the standard deduction limit.

Think of the deductions you will have each of the next three years. Lets say you only get the standard deduction of 12800, 24000 and 24000 with marginal tax rates of 15, 12 and 12. Standard deductions would save 1920, 2880 and 2880 over the next three years. If your itemized deductions would have been 12800 each year, then an additional 10000 charitable deduction in year one would save 1500, while doing nothing in either of the latter two years. You mention bunching. We've done it several times, but the higher standard deduction will likely price us out of doing so. If you already have 24000 in itemized deductions each year, then doing it in year one still saves 1500 while later years but 1200.

Nearly A Moose
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Re: Tax Bill Omnibus Thread

Post by Nearly A Moose » Thu Dec 21, 2017 8:41 pm

Where's Livesoft with all this tax chatter?
Pardon typos, I'm probably using my fat thumbs on a tiny phone.

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triceratop
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Re: Tax Bill Omnibus Thread

Post by triceratop » Thu Dec 21, 2017 8:49 pm

Nearly A Moose wrote:
Thu Dec 21, 2017 8:41 pm
Where's Livesoft with all this tax chatter?
He's fighting the good fight elsewhere:
livesoft wrote:
Thu Dec 21, 2017 4:46 pm
No they are not. They are based on taxable income like they always have been.

It seems that very few US citizens actually know much about how their income taxes are calculated.

Most Americans do not even know how much they pay in income taxes. They don't fill out their tax returns nor even look at them anymore. They don't read the instructions either. They just submit something done by software or maybe a tax preparer. Most don't understand the difference between what is withheld from a paycheck and what they actually owe. These are the same people who may not understand how much a loan costs them, too. Tell them the monthly payment and they are good to go.

There are some behavioral finance issues going on here, too. People will be happy to get a tax refund, but if not as much tax is withheld from their paychecks and they find they must write a check to send in with their tax return, they are upset ... even if they paid less tax overall.
:D
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livesoft
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Re: Tax Bill Omnibus Thread

Post by livesoft » Thu Dec 21, 2017 8:54 pm

Nearly A Moose wrote:
Thu Dec 21, 2017 8:41 pm
Where's Livesoft with all this tax chatter?
This won't change my taxes very much, if at all. I've seen a lot of mis-reporting in good newspapers and other media outlets, so I am waiting for the dust to settle.
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dmcmahon
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Re: Tax Bill Omnibus Thread

Post by dmcmahon » Thu Dec 21, 2017 8:56 pm

mffl wrote:
Thu Dec 21, 2017 7:35 pm
http://thehill.com/homenews/administrat ... ill-friday

The reason for the President to delay signing the bill until January appears to have evaporated. Looks like they exempted the bill from PAYGO rules as part of the deal to avoid a shutdown. Therefore it's possible tomorrow we may be operating under standard forum rules.

Regardless, the extra couple days to discuss has been important for many of us in this end of year crunch time!
Yes, thanks to the moderators for their forbearance under the current highly unusual circumstances. Happy Holidays!

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Munir
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Location: Oregon

Re: Tax Bill Omnibus Thread

Post by Munir » Thu Dec 21, 2017 8:56 pm

New tax bill: 529 Accounts- not just for College Savings anymore? Can one fund elementary & high school education with them?

Allan
Posts: 808
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Location: Houston

Re: Tax Bill Omnibus Thread

Post by Allan » Thu Dec 21, 2017 9:00 pm

pshonore wrote:
Thu Dec 21, 2017 10:25 am
Allan wrote:
Thu Dec 21, 2017 6:46 am
I am trying to understand the S-Corp 20% deduction. For example, if an S-Corp has pass thru earnings of $1,000,000 and the sole shareholder has a W-2 salary of $500,000 from the S-Corp, and the other employees of the S-Corp are paid $500,000, how is the 20% deduction calculated. Is there now a $200,000 deduction (20% of $1,000,000) for the shareholder, thus reducing income to $800,000 + $500,000? And how does the $315,000 limit come into play.

Allan
Its going to take significant amount of time to digest the rules, wait for IRS guidance, and figure all this out as well as ways to restructure a business to take advantage of it. I believe rules are different for "service businesses" (lawyers, consultants, etc) but - the 315K limit is where the deduction starts phasing out for Singles (500K for MFJ status) And that number ($315K) is total income from all sources not just the business. I could be interpreting all of this incorrectly as well.
Thank you. I am still trying to understand the S-Corp 20% deduction, based on my example.

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jriding
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Re: Tax Bill Omnibus Thread

Post by jriding » Thu Dec 21, 2017 9:05 pm

NotWhoYouThink wrote:
Wed Dec 20, 2017 6:07 pm
It's been pointed out that there is a $500 dependent credit for children 17 and over, but it starts phasing out at a lower income level, $110K for MFJ.
I'm wondering, for a kid that turns 17 in November 2018, am I eligible for the $2,000 or $500 child tax credit (ignoring the income phase-out)?

KATNYC
Posts: 434
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Re: Tax Bill Omnibus Thread

Post by KATNYC » Thu Dec 21, 2017 9:12 pm

KATNYC wrote:
Thu Dec 21, 2017 5:26 pm
Phil1234 wrote:
Thu Dec 21, 2017 5:18 pm
KATNYC wrote:
Thu Dec 21, 2017 4:57 pm
Phil1234 wrote:
Thu Dec 21, 2017 4:21 pm
perl wrote:
Thu Dec 21, 2017 2:15 am
Can someone clarify the times rules on home equity loan interest deductibility? Is it completely removed, or still deductible if used for home improvements?
Did this get answered? I am wondering this as well. The kitces article linked previously makes it seem like if the home equity loans or lines-of-credit was used for home improvements, it would still be deductible. But I haven't seen that distinction other places.

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


Totally disallowed.In the case of taxable years beginning after December 31, 2017, and before January 1, 2026—
‘‘(I) DISALLOWANCE OF HOME EQUITY INDEBTEDNESS INTEREST

https://www.scribd.com/document/3672840 ... l-tax-bill




Conference Agreement
The conference agreement provides that, in the case of taxable years beginning after December 31, 2017, and beginning before January 1, 2026, a taxpayer may treat no more than $750,000 as acquisition indebtedness ($375,000 in the case of married taxpayers filing separately). In the case of acquisition indebtedness incurred before December 15, 2017 this limitation is $1,000,000 ($500,000 in the case of married taxpayers filing separately).

For taxable years beginning after December 31, 2025, a taxpayer may treat up to $1,000,000 ($500,000 in the case of married taxpayers filing separately) of indebtedness as acquisition indebtedness, regardless of when the indebtedness was incurred.

Additionally, the conference agreement suspends the deduction for interest on home equity indebtedness. Thus, for taxable years beginning after December 31, 2017, a taxpayer may not claim a deduction for interest on home equity indebtedness. The suspension ends for taxable years beginning after December 31, 2025.
Right, but if you look at the definition of "Acquisition indebtedness", it would cover indeptedness used to "substantially improve a qualified residence of the taxpayer which secures the residence." So even though it is a home equity loan or LOC, if it is used for home improvements, the interest may still be deductible if under the limits. That is what the kitces article states. It doesn't matter if it the debt is a home equity loan or line of credit, instead what it is used for. But maybe it is not correct. That is the question.

Below is from the bill.
"Acquisition indebtedness is indebtedness that is incurred in acquiring, constructing, or substantially improving a qualified residence of the taxpayer and which secures the residence"
I cannot locate a definitive answer. I will ask a tax lawyer.
It appears to close the loophole to get tax-deductible money to buy things unrelated to the home.
Tax lawyer is saying HELOC is deductible so long as the money is used to renovate but not buy a car or something unrelated to the home.

KATNYC
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Re: Tax Bill Omnibus Thread

Post by KATNYC » Thu Dec 21, 2017 9:25 pm

triceratop wrote:
Thu Dec 21, 2017 8:49 pm
Nearly A Moose wrote:
Thu Dec 21, 2017 8:41 pm
Where's Livesoft with all this tax chatter?
He's fighting the good fight elsewhere:
livesoft wrote:
Thu Dec 21, 2017 4:46 pm
No they are not. They are based on taxable income like they always have been.

It seems that very few US citizens actually know much about how their income taxes are calculated.

Most Americans do not even know how much they pay in income taxes. They don't fill out their tax returns nor even look at them anymore. They don't read the instructions either. They just submit something done by software or maybe a tax preparer. Most don't understand the difference between what is withheld from a paycheck and what they actually owe. These are the same people who may not understand how much a loan costs them, too. Tell them the monthly payment and they are good to go.

There are some behavioral finance issues going on here, too. People will be happy to get a tax refund, but if not as much tax is withheld from their paychecks and they find they must write a check to send in with their tax return, they are upset ... even if they paid less tax overall.
:D
This is 100% true. In talking to people about it today, all they heard was more money per paycheck.
Our goal is always to pay just enough for no refund and not having too much of a penalty for underpayment. Most years, it's been a wash with a state refund and paying federal, or vice versa. One person didn't know social security withholding phased out until I mentioned an error with my withholding.

As of right now, depending on if we can prepay real estate taxes for 2018, we don't need to make changes for 2017.
SALT, charity, property taxes & mortgage interest will hover at $26k for 2018 so taking the standard deduction will be fine.
We will make double mortgage payments but that was already planned for 2018 to pay down the 10/1 ARM asap.

BAM!
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Re: Prepaying property tax in 2017

Post by BAM! » Thu Dec 21, 2017 9:30 pm

How does one check their county, for example San Francisco or Los Angeles?

letsgobobby
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Re: Tax Bill Omnibus Thread

Post by letsgobobby » Thu Dec 21, 2017 9:30 pm

Bacchus01 wrote:
Thu Dec 21, 2017 6:51 pm
betablocker wrote:
Thu Dec 21, 2017 6:27 pm
VictoriaF wrote:
Thu Dec 21, 2017 4:43 pm
siamond wrote:
Thu Dec 21, 2017 4:32 pm
betablocker wrote:
Thu Dec 21, 2017 4:10 pm
Seems like most people's posts are getting lost on the thread given all the disparate topics: effects on SALT, for pass through owner, real estate, muni treatment, etc. I'm not sure what difference it makes having one versus 10 threads but it's not my board so not my rules.
Agreed, this kind of arbitrary limitation is quite silly.
I have spent several hours yesterday and additional several hours today reading this entire thread. I bookmarked it and when I click on my "Notifications" it takes me to the first post I have not seen.

While most discussions do not apply to my case, I still find it useful to read everything in the Omnibus on the new tax bill for the reasons as follows:
1. The Bogleheads are very good in bringing up issues that nobody else has thought of.
2. If we had several threads instead of this Omnibus, I would have likely skipped some of them as irrelevant to me.
3. Now, that I've read everything, a variety of topics is stored in the back of my mind. If my financial situation and considerations change, I will have a trigger to look relevant information up.

Victoria

I’m glad it is working for you. My point is many posts about specific topics aren’t getting attention in the overwhelming stream of posts. I can’t really follow it so I guess i’ll exit this topic until January.
Which ones aren’t getting attention?
I haven’t seen an answer as to whether a gift of say $6 million in 2018 will have essentially ‘used up’ one’s lifetime exemption when the lower estate tax limits return in 2026.

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vitaflo
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Re: Tax Bill Omnibus Thread

Post by vitaflo » Thu Dec 21, 2017 9:33 pm

KATNYC wrote:
Thu Dec 21, 2017 9:25 pm
This is 100% true. In talking to people about it today, all they heard was more money per paycheck.
Our goal is always to pay just enough for no refund and not having too much of a penalty for underpayment. Most years, it's been a wash with a state refund and paying federal, or vice versa. One person didn't know social security withholding phased out until I mentioned an error with my withholding.
Most people I talk to don't even understand the tax brackets are progressive. Many of them think if they make an extra $1 to bump them into the next bracket that they will end taking home less money overall because they think the marginal rate applies to their entire income, not just to the last dollar.

The amount of people I've had to correct on this always surprises me. But it would explain some people's opinions on tax law.

lynneny
Posts: 187
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Can I pre-pay 2018 mortgage and deduct interest on 2017 taxes?

Post by lynneny » Thu Dec 21, 2017 9:39 pm

I've been following the debates about whether we can pre-pay certain taxes, and take the deduction on our 2017 taxes, since this is the last year many of us will be itemizing.

I understand that I can't pre-pay 2018 SALT taxes (although I can make an estimated payment now for any state/local tax liability for 2017 that exceeds what was withheld from my paycheck and that I'd normally pay by April 15, 2018). And I'm out of luck on pre-paying any 2018 property taxes, because those taxes are paid through our NYC co-op management.

My question: Is it possible to pre-pay any of my 2018 monthly mortgage payments, and take the interest deduction on my 2017 taxes? If this has been discussed, I must have missed it, or maybe it's just a really stupid question. I made my last 2017 mortgage payment, which is due by Jan. 1, in early December. I'm looking at my monthly mortgage loan statement from Bank of America, and it says: "Paying Your Loan Ahead -- We allow you to prepay your periodic payments one month in advance. If you want to prepay more than one periodic payment, please contact us."

Do you think that means BoA would accept one or more 2018 monthly mortgage payments from me before Dec. 31? And if they did, would the interest component be deductible on my 2017 taxes? Before I call a BoA customer service rep who may have no idea what I'm talking about, I wanted to ask Bogleheads.

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