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

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hulburt1
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by hulburt1 » Tue Dec 26, 2017 3:17 pm

On SS should you still wait until 70? With tax's going up in 10 years. I'm 64 but with the low tax of 12%. I'm converting money to my Roth from my Ira.
SS-65-1500
70-2000

Roth will have about 300000 plus 2m Ira. At 70.

DorothyB
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by DorothyB » Tue Dec 26, 2017 4:46 pm

hulburt1 wrote:
Tue Dec 26, 2017 3:17 pm
On SS should you still wait until 70? With tax's going up in 10 years. I'm 64 but with the low tax of 12%. I'm converting money to my Roth from my Ira.
SS-65-1500
70-2000

Roth will have about 300000 plus 2m Ira. At 70.
We don't know that taxes will go up in 10 years. That is when the current brackets (and maybe other changes??) expire, but they could be made lower before then or extended or . . . You can't be sure that they will go up, not down.

That said, being in a low bracket is a good time, as a general rule, to do conversions from IRA to Roth.

In answer to your main question - I am waiting until I am 70 so that I get more money each month. I could die relatively young, in which case I won't need the money, and I won't care. However, if I live a long life, I like that I will have higher social security income. I look at it sort of like longevity insurance. Also, the higher your social security income starts, the more there is to grow with each COLA

hulburt1
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by hulburt1 » Tue Dec 26, 2017 5:31 pm

thanks

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Ice-9
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by Ice-9 » Tue Dec 26, 2017 6:53 pm

Until today, my County did not allow pre-payment of property taxes. Then today they announce....
Effective today, Montgomery County will accept the prepayment of 2018 County real property taxes.

It will be up to the Internal Revenue Service to determine whether prepayment of 2018 County real property taxes may be deducted for Federal, State, or local income tax purposes...
My County further states that to pre-pay, one must mail or hand-deliver a form with check payment. Since I usually pay through escrow, I contacted my mortgage servicer a couple times today about whether or not this would be possible. One rep told me yes, just provide receipt to their tax department. A second rep on another call didn't think it was possible, that escrow accounts must be paid by the mortgage servicer. I gave up on reaching their tax department for a final answer after a thirty minute hold.

Given that (1) the County's wording makes it sound like the IRS is not yet decided on whether or not prepayment of 2018 property taxes will even be deductible in 2017 and (2) the varied responses from my mortgage services make me think working the pre-payment into my escrow could be a mess, I'm debating with myself whether this effort will be worthwhile. If it worked, I'd get about $700 back from the IRS on the County's portion.

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grabiner
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by grabiner » Tue Dec 26, 2017 8:12 pm

hulburt1 wrote:
Tue Dec 26, 2017 3:17 pm
On SS should you still wait until 70? With tax's going up in 10 years. I'm 64 but with the low tax of 12%. I'm converting money to my Roth from my Ira.
SS-65-1500
70-2000

Roth will have about 300000 plus 2m Ira. At 70.
It's probably better to wait until age 70, and withdraw from your traditional IRA for living expenses, converting up to the top of the 12% bracket, possibly the 22% bracket. If you take SS now, you won't be able to take as much out of your traditional IRA, so after age 70, you will have less SS but more RMDs, and likely about the same amount in tax.
Wiki David Grabiner

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FIREchief
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by FIREchief » Tue Dec 26, 2017 8:29 pm

Beth* wrote:
Tue Dec 26, 2017 1:28 pm
I have opened a Donor Advised Fund and funded it in order to reduce my taxable income for 2017. I put in the amount of money we would normally give to charity over five years. I don't want to give up any additional liquidity by funding it further out than that. We've contributed the maximum to our retirements accounts ($24,000 each for a total of $48,000), which is something we have been doing for many years.

Is there anything else I can/should be doing at this late date to reduce taxable income in 2017? We are still subject to the AMT in 2017, even with the deduction for the Donor Advised Fund, so pre-paying 2018 state and local taxes won't help us.
First of all, good job getting that DAF opened and funded. :sharebeer Your situation is very common here on the forum.

I don't really understand what you mean by "give up additional liquidity," unless you are uncertain that you will continue your charitable contributions beyond five years. Some of us have front loaded our DAFs far beyond five years, specifically because of the tax law changes. Since you're still in the AMT exemption phase out zone, that's a 35 cents on the dollar subsidy that the fed is willing to kick in (plus whatever your state marginal rate is). I'll take the governments' ~40 cents toward my dollar of (far) future charitable giving any day of the week. As a bonus, I also avoid some fairly meaningful capital gains taxes, that I would have to pay eventually unless I die before selling those particular shares.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

blurryvision
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by blurryvision » Tue Dec 26, 2017 8:47 pm

So I have the option of prepaying my property tax for our own home as well as for our rental property.

If we can only pay for one in 2017, is it more tax advantageous to prepay our home property tax or the property tax for our rental property?

Thank you!

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ram
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by ram » Tue Dec 26, 2017 8:58 pm

Thanks to the posters who answered my AMT queries.
I opened a DAF account yesterday and funded it today at Fidelity. Took 10 minutes on the internet and 3 minutes on the phone. I funded it from an existing taxable account at Fido. Used appreciated stock. Looks like Fido charitable is open half day on Dec 30 and 31.
Ram

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Thrifty Femme
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by Thrifty Femme » Tue Dec 26, 2017 8:59 pm

blurryvision wrote:
Tue Dec 26, 2017 8:47 pm
So I have the option of prepaying my property tax for our own home as well as for our rental property.

If we can only pay for one in 2017, is it more tax advantageous to prepay our home property tax or the property tax for our rental property?

Thank you!

According to this article from the National Law Review, the 10k limit doesn't apply for rental property taxes.
Limitation on Deduction for State and Local Taxes: The deduction for state and local taxes is limited to an aggregate amount of $10,000 for both property taxes on homes used for personal purposes, and either state income taxes or sales taxes. For example, if a taxpayer pays $8,000 in property taxes on her personal residence and $6,000 in state income taxes, the deduction will be limited to $10,000. It will not be possible to take a deduction in 2017 for 2018 state income taxes by prepaying such taxes in 2017, as the legislation expressly prohibits such tax planning. It would be possible to get a deduction in 2017 for a prepayment of real property taxes if the state law provides a mechanism to prepay them. The limitation on deduction of property taxes does not apply to real property held for rental, or for sales taxes paid in connection with a business. However, the $10,000 limitation would apply to state income taxes paid on income from a business. For example, assume an investor owns a rental property, and pays $20,000 in property taxes on the property. The $20,000 in property taxes can be deducted, but the state income taxes resulting from this rental business would be subject to the $10,000 overall limitation on the deduction for state and local taxes.
I would pay the property tax for your home.

mega317
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by mega317 » Tue Dec 26, 2017 10:46 pm

Ice-9 wrote:
Tue Dec 26, 2017 6:53 pm
Since I usually pay through escrow, I contacted my mortgage servicer a couple times today about whether or not this would be possible. One rep told me yes, just provide receipt to their tax department. A second rep on another call didn't think it was possible, that escrow accounts must be paid by the mortgage servicer. I gave up on reaching their tax department for a final answer after a thirty minute hold.
I'm not an authority but the escrow money is yours. It's not like if you pre-pay the county directly then the bank is just going to keep the difference.

madbrain
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by madbrain » Wed Dec 27, 2017 2:07 am

mega317 wrote:
Tue Dec 26, 2017 10:46 pm
Ice-9 wrote:
Tue Dec 26, 2017 6:53 pm
Since I usually pay through escrow, I contacted my mortgage servicer a couple times today about whether or not this would be possible. One rep told me yes, just provide receipt to their tax department. A second rep on another call didn't think it was possible, that escrow accounts must be paid by the mortgage servicer. I gave up on reaching their tax department for a final answer after a thirty minute hold.
I'm not an authority but the escrow money is yours. It's not like if you pre-pay the county directly then the bank is just going to keep the difference.
True, but the county may just accept the extra money towards the next installment of taxes, rather than return it to the escrow servicer. In this case, though, on the next year's bill, this amount would be credited presumably, and the following year, the escrow servicer would disburse less money to the county, and due to escrow balance overage, refund you the difference one way or another. The error may take some time to correct itself though, could be as long as 18 - 24 months, so if you have an escrow and overpay, make sure you don't need to see that money again for a while.
This is my case. I am going to call my county to see what they do if they receive an overpayment, ie. all installments billed have been paid, and excess money is received.
For insurance purposes, when I pay my home insurance bill with a credit card to get reward points, the insurer promptly sends the excess money to me - not back to the bank. Ideally, the county would do the same, but I think it's unlikely that they will. Will try calling my county to find out. I think that is more important than what the escrow provider will do.

madbrain
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by madbrain » Wed Dec 27, 2017 2:12 am

Ice-9 wrote:
Tue Dec 26, 2017 6:53 pm
Until today, my County did not allow pre-payment of property taxes. Then today they announce....
Effective today, Montgomery County will accept the prepayment of 2018 County real property taxes.

It will be up to the Internal Revenue Service to determine whether prepayment of 2018 County real property taxes may be deducted for Federal, State, or local income tax purposes...
My County further states that to pre-pay, one must mail or hand-deliver a form with check payment. Since I usually pay through escrow, I contacted my mortgage servicer a couple times today about whether or not this would be possible. One rep told me yes, just provide receipt to their tax department. A second rep on another call didn't think it was possible, that escrow accounts must be paid by the mortgage servicer. I gave up on reaching their tax department for a final answer after a thirty minute hold.

Given that (1) the County's wording makes it sound like the IRS is not yet decided on whether or not prepayment of 2018 property taxes will even be deductible in 2017 and (2) the varied responses from my mortgage services make me think working the pre-payment into my escrow could be a mess, I'm debating with myself whether this effort will be worthwhile. If it worked, I'd get about $700 back from the IRS on the County's portion.
How does your county even know whether you have an escrow account or not ? They just get a check towards the tax bill for your property. It doesn't really matter who the check comes from. I would think that whoever sends the check first would satisfy the installment. If your check is first, it should be fine. The question is what happens if a second check comes from the servicer later on, with no current bill due.

The county could then choose to either accept the check and credit it towards next year's taxes, or return the check to the servicer is they are not accepting overpayments .

The later would be preferable. In the case of overpaid home insurance, my insurer (Safeco) cash the second check from Wells Fargo escrow, and then sends me a check for the excess balance. The escrow provider has no idea that my insurance is actually already paid up. With property taxes, they might find out if the check is returned by the county.

AnonJohn
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Re: Tax Bill Omnibus Thread

Post by AnonJohn » Wed Dec 27, 2017 4:45 am

KlangFool wrote:
Wed Dec 20, 2017 5:33 pm
AnonJohn wrote:
Wed Dec 20, 2017 5:08 pm
KlangFool wrote:
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
Klang, sorry but no. This analysis may apply to you: https://www.washingtonpost.com/news/won ... n-college/
AnonJohn,

I think the analysis is flawed.

A family of 4 with 2 college age kids.

1) Under the old law, the personal exemption X 4 ~ 16K

2) Under the new law, the standard deduction increase by 12K.

3) So, the difference is 16K - 12K = 4K. But, this is offset by $500 X 2 = $1,000 of tax credit.

4) I think it is a wash.

5) But, the reduction of 15% to 12% and 25% to 22% will give some money back.

KlangFool
For the record, I think Klang's reply here is convincing. I was unaware of the $500 x2 credit when I posted. My kids are much younger! The other consideration is itemization, but I, for one, plan to have no mortgage when colleges come due!

madbrain
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Re: Tax Bill Omnibus Thread

Post by madbrain » Wed Dec 27, 2017 5:28 am

AnonJohn wrote:
Wed Dec 27, 2017 4:45 am
For the record, I think Klang's reply here is convincing. I was unaware of the $500 x2 credit when I posted. My kids are much younger! The other consideration is itemization, but I, for one, plan to have no mortgage when colleges come due!
Itemization is not just for mortgage interest. Itemization was also for state income taxes and property taxes. Those without kids and living in blue states are being hit badly by the tax increase.

KlangFool
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Re: Tax Bill Omnibus Thread

Post by KlangFool » Wed Dec 27, 2017 8:54 am

madbrain wrote:
Wed Dec 27, 2017 5:28 am
AnonJohn wrote:
Wed Dec 27, 2017 4:45 am
For the record, I think Klang's reply here is convincing. I was unaware of the $500 x2 credit when I posted. My kids are much younger! The other consideration is itemization, but I, for one, plan to have no mortgage when colleges come due!
Itemization is not just for mortgage interest. Itemization was also for state income taxes and property taxes. Those without kids and living in blue states are being hit badly by the tax increase.
Please show us the numbers. I don't think that's true for most people in that situation.

Klangfool

cherijoh
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Re: Tax Bill Omnibus Thread

Post by cherijoh » Wed Dec 27, 2017 9:05 am

Nutmeg wrote:
Thu Dec 21, 2017 11:01 am
PaulF wrote:
Thu Dec 21, 2017 9:48 am
CollegePrudens wrote:
Thu Dec 21, 2017 9:09 am
PaulF wrote:
Thu Dec 21, 2017 8:37 am
CP: I believe that if you are funding with cash, then the account may be set up immediately, with no fears of delay. It took me maybe 30 minutes to walk through the "paperwork" online.

However, you may want to call them at 888-383-4483 to make sure I am right!
Thanks Paul.

After researching DAFs, last night and this AM, I have decided to move forward. Two decisions remain: how much (range is $15K - $25K given cash constraints) and where (Vanguard or Fidelity - most of my assets are at Vanguard with a smaller portion at Fidelity)
You may be aware of this, but the minimum at VG is $25k to establish a new DAF.

To me, Fidelity looks like the better deal for modest DAFs. The minimum new amount is $5k. You may recommend grants with a smaller minimum grant amount ($50 vs. $500, I believe). The fee structures are similar overall, but when you are below $25k in your account, Fido looks better.

Note that you may switch your decision in the future. You may "advise" that VG make a grant to Fido (or vice versa). I went with VG because the funds were at VG, but I think I will switch to Fido next year.
Vanguard made sense to me because I don't have an account with Fidelity. I also learned that Vanguard customers who have access to electronic authorization have extra time (beyond that listed on the chart I referenced earlier) to initiate a contribution to the DAF because the electronic transfer occurs immediately.
I set up my DAF in the 1st quarter in anticipation of possible retirement next year. All my money (outside of 401k) was at Vanguard but I went with Fido because of the lower initial contribution and the much lower grant amounts. I like to spread my contributions around to multiple charities. VG's minimum grant amount would make that impossible.

killjoy2012
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by killjoy2012 » Wed Dec 27, 2017 9:35 am

Question on Sec. 11042. Limitation on deduction for state and local, etc. taxes...

Assuming a single filer w/ no kids who always itemizes when filing...
Assuming typical annual property taxes of ~$3,500/year.
Assuming typical W2 Box 17 "State income tax" usually ~$6,000/year.
Assuming no local/city income tax paid.

Then there's really no point in trying to prepay 2018 property taxes prior to 12/31/2017. Correct?

neilpilot
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by neilpilot » Wed Dec 27, 2017 9:39 am

killjoy2012 wrote:
Wed Dec 27, 2017 9:35 am
Question on Sec. 11042. Limitation on deduction for state and local, etc. taxes...

Assuming a single filer w/ no kids who always itemizes when filing...
Assuming typical annual property taxes of ~$3,500/year.
Assuming typical W2 Box 17 "State income tax" usually ~$6,000/year.
Assuming no local/city income tax paid.

Then there's really no point in trying to prepay 2018 property taxes prior to 12/31/2017. Correct?
Maybe not correct, assuming your overall income isn't expect to change much next year. If you can prepay to transfer deductions to TY2017, you maybe able to take advantage in 2 ways. First off, you will be taking these deductions against income that will otherwise be taxed at a higher rate in 2017. Secondly, and maybe more importantly, your 2018 deductions fall and you can therefore gain more advantage taking the standard deduction in 2018 (classic bunching tactic)..

keith6014
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by keith6014 » Wed Dec 27, 2017 9:51 am

Living in NJ. Property tax is ~14k. In the 33% tax bracket.
If having a change to prepay property tax, should I do it? I am assuming I can claim that I payed the taxes in 2017 for 2018 so in 2017 taxes I can claim it?

killjoy2012
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by killjoy2012 » Wed Dec 27, 2017 10:32 am

neilpilot wrote:
Wed Dec 27, 2017 9:39 am
killjoy2012 wrote:
Wed Dec 27, 2017 9:35 am
Question on Sec. 11042. Limitation on deduction for state and local, etc. taxes...

Assuming a single filer w/ no kids who always itemizes when filing...
Assuming typical annual property taxes of ~$3,500/year.
Assuming typical W2 Box 17 "State income tax" usually ~$6,000/year.
Assuming no local/city income tax paid.

Then there's really no point in trying to prepay 2018 property taxes prior to 12/31/2017. Correct?
Maybe not correct, assuming your overall income isn't expect to change much next year. If you can prepay to transfer deductions to TY2017, you maybe able to take advantage in 2 ways. First off, you will be taking these deductions against income that will otherwise be taxed at a higher rate in 2017. Secondly, and maybe more importantly, your 2018 deductions fall and you can therefore gain more advantage taking the standard deduction in 2018 (classic bunching tactic)..
Thanks - good points! It does look like my 2018 tax rate will be 3-4 points lower across all of my income vs 2017, so it'd make sense to pull 2018 property tax liability into 2017, if possible. I also just reviewed my 2016 tax return's AMT calc worksheet (I've never had to pay AMT historically), and it looks like my itemized 1040 taxes due were ~$5k higher than the AMT tax liability calculated, so I don't think pulling ~$3,500 of 2018 property taxes forward into 2017 will trigger AMT - at least from my quick digesting of the Form 6251 worksheet...

And, of course, I just called the city's Treasurer's Office, and 2018 prepayments aren't allowed. :oops:

cusetownusa
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Re: Tax Bill Omnibus Thread

Post by cusetownusa » Wed Dec 27, 2017 11:32 am

madbrain wrote:
Wed Dec 27, 2017 5:28 am
AnonJohn wrote:
Wed Dec 27, 2017 4:45 am
For the record, I think Klang's reply here is convincing. I was unaware of the $500 x2 credit when I posted. My kids are much younger! The other consideration is itemization, but I, for one, plan to have no mortgage when colleges come due!
Itemization is not just for mortgage interest. Itemization was also for state income taxes and property taxes. Those without kids and living in blue states are being hit badly by the tax increase.
I live in NY (high property tax and income tax state)...My Federal Taxes will be going down. I could see how how earners in NY with high property taxes could get hurt with higher taxes but most won't.

TheCowbell
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by TheCowbell » Wed Dec 27, 2017 11:50 am

I live in NY and even with kids I'm going to get a considerable increase in taxable liability. Mostly due to the 10k limit in deductions; I reached that in mtg interest alone, let alone 15k in property & school taxes, 8k in state tax and of course the personal exemption elimination.

I'll keep my political commentary to myself ...

TIAX
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by TIAX » Wed Dec 27, 2017 11:54 am

TheCowbell wrote:
Wed Dec 27, 2017 11:50 am
I live in NY and even with kids I'm going to get a considerable increase in taxable liability. Mostly due to the 10k limit in deductions; I reached that in mtg interest alone, let alone 15k in property & school taxes, 8k in state tax and of course the personal exemption elimination.

I'll keep my political commentary to myself ...
Mortgage interest isn't included in the 10k limit.

FRT15
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by FRT15 » Wed Dec 27, 2017 12:05 pm

I probably missed it... Did the bill that got passed remove the ability to do specific lot identification when making sales?

TheCowbell
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by TheCowbell » Wed Dec 27, 2017 12:10 pm

TIAX wrote:
Wed Dec 27, 2017 11:54 am
TheCowbell wrote:
Wed Dec 27, 2017 11:50 am
I live in NY and even with kids I'm going to get a considerable increase in taxable liability. Mostly due to the 10k limit in deductions; I reached that in mtg interest alone, let alone 15k in property & school taxes, 8k in state tax and of course the personal exemption elimination.

I'll keep my political commentary to myself ...
Mortgage interest isn't included in the 10k limit.
You're right - I got excited for a second, then I saw my spreadsheet already represented this fact.

I suppose I'm happy that those with much more meager deductions, who need the tax relief the most, will be getting a substantial benefit. I just wish the mega-rich that definitely don't need it weren't also getting substantial tax relief.

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torius71
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by torius71 » Wed Dec 27, 2017 12:19 pm

Does anyone know if the new AMT levels will be adjusted for inflation each year? One of the major problems with AMT in the past was it wasn’t adjusted.
"A new truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it."-MP

calendario
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by calendario » Wed Dec 27, 2017 12:30 pm

FRT15 wrote:
Wed Dec 27, 2017 12:05 pm
I probably missed it... Did the bill that got passed remove the ability to do specific lot identification when making sales?
No, SpecID is still available.

cusetownusa
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by cusetownusa » Wed Dec 27, 2017 1:17 pm

TheCowbell wrote:
Wed Dec 27, 2017 11:50 am
I live in NY and even with kids I'm going to get a considerable increase in taxable liability. Mostly due to the 10k limit in deductions; I reached that in mtg interest alone, let alone 15k in property & school taxes, 8k in state tax and of course the personal exemption elimination.

I'll keep my political commentary to myself ...
interesting, I am in a similar situation as you and based on what I know my federal taxes will be decreasing by at least $2,000. I have 2 kids, $10,500 in property taxes, $10,000+ in State taxes and about $9,000 in mortgage interest.

Now if only our State could figure out how to run themselves like the lower tax states. I will keep my political commentary to myself as well.
Last edited by cusetownusa on Wed Dec 27, 2017 1:20 pm, edited 1 time in total.

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Barry Barnitz
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by Barry Barnitz » Wed Dec 27, 2017 1:19 pm

torius71 wrote:
Wed Dec 27, 2017 12:19 pm
Does anyone know if the new AMT levels will be adjusted for inflation each year? One of the major problems with AMT in the past was it wasn’t adjusted.
According to the Journal of Accountancy:
For tax years beginning after Dec. 31, 2017, and beginning before Jan. 1, 2026, the AMT exemption amount increases to $109,400 for married taxpayers filing a joint return (half this amount for married taxpayers filing a separate return) and $70,300 for all other taxpayers (other than estates and trusts). The phaseout thresholds are increased to $1 million for married taxpayers filing a joint return and $500,000 for all other taxpayers (other than estates and trusts). The exemption and threshold amounts will be indexed for inflation.
regards,
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KlangFool
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by KlangFool » Wed Dec 27, 2017 4:52 pm

Hi,

Did the part about using 529 for K-12 education make it through the final bill?

Thanks in advance.

KlangFool

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LadyGeek
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by LadyGeek » Wed Dec 27, 2017 5:18 pm

Yes, it's in the wiki. See: Outline of tax law changes (Part IV: Education)

There's an on-going discussion: Using 529 for grade school- help with strategy
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madbrain
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Re: Tax Bill Omnibus Thread

Post by madbrain » Wed Dec 27, 2017 5:26 pm

cusetownusa wrote:
Wed Dec 27, 2017 11:32 am
I live in NY (high property tax and income tax state)...My Federal Taxes will be going down. I could see how how earners in NY with high property taxes could get hurt with higher taxes but most won't.
Do you have kids ? This is probably the difference. My mortgage, property tax and state income tax numbers are all very close to yours, but I'm getting a significant tax increase instead. No kids.
Last edited by madbrain on Wed Dec 27, 2017 5:28 pm, edited 1 time in total.

Helo80
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by Helo80 » Wed Dec 27, 2017 5:28 pm

The recently signed tax bill has been a real eye opener for me as to what other states charge in taxes. Of course I have always known there are "high tax states", but with a new tax law and numbers put into formulas, I am amazed at what is going on in some states.

MikeG62
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by MikeG62 » Wed Dec 27, 2017 5:37 pm

keith6014 wrote:
Wed Dec 27, 2017 9:51 am
Living in NJ. Property tax is ~14k. In the 33% tax bracket.
If having a change to prepay property tax, should I do it? I am assuming I can claim that I payed the taxes in 2017 for 2018 so in 2017 taxes I can claim it?
Yes you should consider doing it. Paying in 2018 won't benefit you at all, so might as well pay in 2017 when you can take the deduction. Just make sure you have a tax assessment, a bill (payment vouchers) in hand and that your municipality will apply to your outstanding tax liability (and not apply as a deposit to be applied to future taxes).

You have a few days left to act, so you need to move fast.

Just make sure you are not in the AMT. If in the AMT, then no reason to prepay.
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cusetownusa
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Re: Tax Bill Omnibus Thread

Post by cusetownusa » Wed Dec 27, 2017 5:49 pm

madbrain wrote:
Wed Dec 27, 2017 5:26 pm
cusetownusa wrote:
Wed Dec 27, 2017 11:32 am
I live in NY (high property tax and income tax state)...My Federal Taxes will be going down. I could see how how earners in NY with high property taxes could get hurt with higher taxes but most won't.
Do you have kids ? This is probably the difference. My mortgage, property tax and state income tax numbers are all very close to yours, but I'm getting a significant tax increase instead. No kids.
Yes, 2 kids. Without them I would probably see an increase as well.

I consider it a state/local tax issue and not the a federal tax issue. If our state and local taxes weren’t so high we wouldn’t even have to worry about a negative impact on the new tax law.

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

Post by KlangFool » Wed Dec 27, 2017 5:53 pm

LadyGeek wrote:
Wed Dec 27, 2017 5:18 pm
Yes, it's in the wiki. See: Outline of tax law changes (Part IV: Education)

There's an on-going discussion: Using 529 for grade school- help with strategy
Thanks.

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Outafter20
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by Outafter20 » Wed Dec 27, 2017 6:14 pm

It seems like prepaying 2018s property tax is very popular. I went down to the tax collector's office today and the line was down the block and around the corner. Funny thing is we don't know for sure if the IRS will allow the deduction. I figured it was worth a try and worse case, I got a 1% discount on the second half of the bill which amounted to a whole $16.83. :sharebeer

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

Post by MikeG62 » Wed Dec 27, 2017 6:24 pm

This just out from the IRS an hour ago...

https://www.irs.gov/newsroom/irs-adviso ... id-in-2017

https://www.cnbc.com/2017/12/27/irs-say ... -2017.html

"The IRS said Wednesday that people can deduct their 2018 state and local property taxes only if they were assessed and prepaid during 2017.

The key development from the IRS statement Wednesday is that people can only deduct prepaid property taxes that have already been assessed by local governments. Prepayments of anticipated property taxes will not be deductible."

I don't think this breaks any new ground as the consensus on this forum was precisely what the IRS has just issued. Still good to know.
Last edited by MikeG62 on Wed Dec 27, 2017 6:32 pm, edited 1 time in total.
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jebmke
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by jebmke » Wed Dec 27, 2017 6:24 pm

Outafter20 wrote:
Wed Dec 27, 2017 6:14 pm
It seems like prepaying 2018s property tax is very popular. I went down to the tax collector's office today and the line was down the block and around the corner. Funny thing is we don't know for sure if the IRS will allow the deduction. I figured it was worth a try and worse case, I got a 1% discount on the second half of the bill which amounted to a whole $16.83. :sharebeer
IRS has now issued guidance

viewtopic.php?p=3685721#p3685721
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FIREchief
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by FIREchief » Wed Dec 27, 2017 6:24 pm

Outafter20 wrote:
Wed Dec 27, 2017 6:14 pm
It seems like prepaying 2018s property tax is very popular. I went down to the tax collector's office today and the line was down the block and around the corner. Funny thing is we don't know for sure if the IRS will allow the deduction. I figured it was worth a try and worse case, I got a 1% discount on the second half of the bill which amounted to a whole $16.83. :sharebeer
If you had a "bill," why didn't you just mail in a check?
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by Outafter20 » Wed Dec 27, 2017 6:27 pm

FIREchief wrote:
Wed Dec 27, 2017 6:24 pm
Outafter20 wrote:
Wed Dec 27, 2017 6:14 pm
It seems like prepaying 2018s property tax is very popular. I went down to the tax collector's office today and the line was down the block and around the corner. Funny thing is we don't know for sure if the IRS will allow the deduction. I figured it was worth a try and worse case, I got a 1% discount on the second half of the bill which amounted to a whole $16.83. :sharebeer
If you had a "bill," why didn't you just mail in a check?
They were printing out the bills at the office. There wouldn't have been enough time to print and mail them to the homeowners by 12/31.

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FIREchief
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by FIREchief » Wed Dec 27, 2017 6:39 pm

Outafter20 wrote:
Wed Dec 27, 2017 6:27 pm
FIREchief wrote:
Wed Dec 27, 2017 6:24 pm
Outafter20 wrote:
Wed Dec 27, 2017 6:14 pm
It seems like prepaying 2018s property tax is very popular. I went down to the tax collector's office today and the line was down the block and around the corner. Funny thing is we don't know for sure if the IRS will allow the deduction. I figured it was worth a try and worse case, I got a 1% discount on the second half of the bill which amounted to a whole $16.83. :sharebeer
If you had a "bill," why didn't you just mail in a check?
They were printing out the bills at the office. There wouldn't have been enough time to print and mail them to the homeowners by 12/31.
Thanks for clarifying. My county always sends both first and second half bills in Septamber (one due Nov 1, one due May 1 of the following year). I'm sure there are many versions of this.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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

Post by LadyGeek » Wed Dec 27, 2017 7:13 pm

MikeG62 wrote:
Wed Dec 27, 2017 6:24 pm
This just out from the IRS an hour ago...

https://www.irs.gov/newsroom/irs-adviso ... id-in-2017

https://www.cnbc.com/2017/12/27/irs-say ... -2017.html

"The IRS said Wednesday that people can deduct their 2018 state and local property taxes only if they were assessed and prepaid during 2017.

The key development from the IRS statement Wednesday is that people can only deduct prepaid property taxes that have already been assessed by local governments. Prepayments of anticipated property taxes will not be deductible."

I don't think this breaks any new ground as the consensus on this forum was precisely what the IRS has just issued. Still good to know.
Who needs to watch the news? It's posted here first. :)

Since this is a general tax discussion, let me add what the IRS Advisory also mentioned:
The IRS reminds taxpayers that a number of provisions remain available this week that could affect 2017 tax bills. Time remains to make charitable donations. See IR-17-191 for more information. The deadline to make contributions for individual retirement accounts - which can be used by some taxpayers on 2017 tax returns - is the April 2018 tax deadline.
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IRS Property Tax Clarification

Post by Carson » Wed Dec 27, 2017 7:30 pm

Today, I listened to our Cook County Treasurer explain that they released the '2018 First Installment' bills early (by 2 months). The usual 'First Installment' invoice is always an estimate, based on half of the previous years' assessed amount, so that is customary how that is billed. When I logged into the system to make the payment, my PIN showed the following info:

Installment: 1st
Tax amount billed: $X
Tax Due Date: 3/1/2018
Balance Due as of 12/06/17: $X

IMO, the language of 'amount billed' and 'balance due' implies there was a legitimate liability to my household as of 12/31/17. But alas, I went into corporate accounting, not the public track, so I may be reading into how I want it. :)
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by yukonjack » Wed Dec 27, 2017 7:31 pm

MikeG62 wrote:
Wed Dec 27, 2017 6:24 pm
This just out from the IRS an hour ago...

https://www.irs.gov/newsroom/irs-adviso ... id-in-2017

https://www.cnbc.com/2017/12/27/irs-say ... -2017.html

"The IRS said Wednesday that people can deduct their 2018 state and local property taxes only if they were assessed and prepaid during 2017.

The key development from the IRS statement Wednesday is that people can only deduct prepaid property taxes that have already been assessed by local governments. Prepayments of anticipated property taxes will not be deductible."

I don't think this breaks any new ground as the consensus on this forum was precisely what the IRS has just issued. Still good to know.
Thanks for the update. Very helpful as it perfectly describes my county. They are accepting the money but have not completed the assessment so no need to prepay on my part.

logiclife
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by logiclife » Wed Dec 27, 2017 8:36 pm

Geez, couldn't IRS come up with this guidance earlier ? I already prepaid my taxes and seems like it's useless

cherijoh
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Re: Bunching mortgage for 1 year, 2 years?

Post by cherijoh » Wed Dec 27, 2017 8:42 pm

NorCalDad wrote:
Thu Dec 21, 2017 2:17 pm
Hayden wrote:
Thu Dec 21, 2017 2:03 pm
itworks wrote:
Thu Dec 21, 2017 1:58 pm
Want to run this idea with you folks for my situation:

1. I am pretty sure I will hit hard by AMT in year 2017.
2. In HCOLA state. my SALT+Property tax is way over the allowed $10K.
3. Mortgage interest is about $18K in 2017, which makes my 2018 itemized-deduction ($27K) not too valuable compared to the standard-deduction $24K.

My lender said I can prepay mortgage for as many years as I like (which is bizarre, and I do not know whether I can trust the CSR; for any question I asked, she would reply 'let me check and get back to you'.)

Let us assume I can prepay mortgage for N years, and here is the math:

- prepay 1 year
extra mortgage interest deducted from 2017 filing: $17K.
Saved tax in 2017: $4.8K.
Added tax in 2018: $1.3K

- prepay 2 years
extra mortgage interest deducted from 2017 filing: $34K.
Saved tax in 2017: $9.5K.
Added tax in 2018: $5.5K

The other consideration factor is, if that amount of money does not go to the mortgage, I can use them for investment, so there is an opportunity cost.

Any pointers? Should I go ahead?
I interpret "prepay mortgage" to mean pay down principal, not prepay interest. Suggest you get clarification on this point.
I was skeptical about this, too. But at least at my mortgage holder, which I assume is one shared by others here (PenFed), the CSR pointed out that you actually have to take further action to direct your payment toward principal; any payment the system accepts is automatically applied to a monthly principal+interest amount due. She said an extra payment now would go toward my 2/1/18 bill, but wasn't sure if the system then would reset and accept a third payment toward a 3/1/18 bill.
@itworks - I think you may be missing the forest for the trees. Why in the world would you want to tie up 2 years worth of mortgage payments in order to just have the mortgage interest be deductible? If you have the cash flow to prepay 24 months of mortgage, why not use it to pay down a chunk of your principal and shorten the duration of your mortgage? You could also look into whether your mortgage company would recast your mortgage.

@Norcaldad - I believe the CSR was correct - if you make a regular mortgage payment and don't direct it towards principal it will just be credited as your next mortgage payment due. In the olden days before online banking, if you were going to be out of town around when your mortgage payment was due, it was quite common to mail your payment (with its accompanying coupon) in early.

The big question in my mind is would your 1099 from the lender credit those extra interest payments to 2017 or would they show up on your 2018 1099?

Gray
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by Gray » Wed Dec 27, 2017 9:33 pm

moved to different thread
Last edited by Gray on Wed Dec 27, 2017 10:52 pm, edited 1 time in total.

Spirit Rider
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Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Post by Spirit Rider » Wed Dec 27, 2017 10:29 pm

logiclife wrote:
Wed Dec 27, 2017 8:36 pm
Geez, couldn't IRS come up with this guidance earlier ? I already prepaid my taxes and seems like it's useless
This is not new guidance. It has always been true. Deduction bunching has been done for a long time.

You can only deduct an early payment in 2017 if you actually have a payment amount due in 2018. People have just chosen to ignore the advice given.

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

Post by bogleraw » Thu Dec 28, 2017 1:25 am

Hi all, I am looking for advice on whether I should take the opportunity to prepay the April portion ($7k) of my 2017-2018 taxes online tomorrow.

I live in a HCOL area and bought a house in 2016 and work in tech.

For the 2016 tax year, I had the following situation:
AGI: $300k,
State and local income taxes: $19k
Property taxes: $3k
Mortgage interest: $10k
AMT due: $2k

For 2017, I anticipate the following:
AGI: $350k,
State and local income taxes: $34k (I adjusted W4 significantly after owing a lot in April)
Property taxes: $15k
Mortgage interest: $25k
AMT due: ???? not sure if I will owe something, but I am leaning towards yes.

Based on these numbers, does it make sense for me to prepay the April taxes online tomorrow? Or do I need to consider anything else to make this decision?

Given that I am not sure if I will be hit by AMT, is there any downside at all to prepaying the April property taxes?

Thank you!

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