Proposed tax plan

[pb4uski]

I agree... since simplification is one of the stated goals creating different brackets for ordinary income and capital gains when they are currently aligned is silly. Perhaps it will be changed to align in committee or in the Senate or in conference.

 

[audreyh1]

I'd rather have the tax code make sense. Things like this do not simplify. It further complicates the tax planning process. If it's a problem of impact, then make it up somewhere else. Sure, one option would be to drop the $90K (top of 12% bracket) just enough to keep the impact the same ($1.5T), while reconnecting CG thresholds and ordinary income brackets. I don't think you'd have to drop it very much. Or better yet, raise the corporate rate to 21%.

Well - they simplify with one hand and complicate with the other. I don't think any of this is "reform" if reform means simplification.

 

[Travelfreek]

Using this calculator:
https://www.marketwatch.com/story/the-new-trump-tax-calculator-what-do-you-owe-2017-10-26
I keyed in the information that will apply to our 2017 income (even though I know the tax plan will not go into effect until 2018 income period). I just wanted to see what would happen if we couldn't write off the $12,000 we owe in CA State TAX in 2017 and just used the $7000 in property tax and what I estimate to be $12000 in mortgage interest in addition to $5000 charity deduction. This was based on $195,000 income. The end result? Exactly the same amount of federal tax owed = $31,050 whether using the new plan with no itemizing or itemizing with the limited items we can now itemize. Another fact then dawned on me. My trip to the CPA will no longer be necessary. Honestly, it's my favorite appointment of the entire year! Rats! One last trip next spring and my ritual will no longer be needed. Eeek! CPAs are going to lose a lot of clients I'm afraid. I guess paying our house off makes even more sense now. The $12000 of interest will no longer be a factor if the $24000 standard deduction will shake out to the same amount. Hmmmmm. I was certain we would pay more in this new tax plan but now I can't support my hunch having used this calculator. I guess we will save the $375 we used to pay our CPA. So for us, we do not save any money but we also do not pay any extra than we are paying now. We will still pay $12,000 in CA state income tax and will get no relief for that. I guess they call that a sunshine tax, eh?

 

[jazz4cash]

Using this calculator:
https://www.marketwatch.com/story/the-new-trump-tax-calculator-what-do-you-owe-2017-10-26
I keyed in the information that will apply to our 2017 income (even though I know the tax plan will not go into effect until 2018 income period). I just wanted to see what would happen if we couldn't write off the $12,000 we owe in CA State TAX in 2017 and just used the $7000 in property tax and what I estimate to be $12000 in mortgage interest in addition to $5000 charity deduction. This was based on $195,000 income. The end result? Exactly the same amount of federal tax owed = $31,050 whether using the new plan with no itemizing or itemizing with the limited items we can now itemize. Another fact then dawned on me. My trip to the CPA will no longer be necessary. Honestly, it's my favorite appointment of the entire year! Rats! One last trip next spring and my ritual will no longer be needed. Eeek! CPAs are going to lose a lot of clients I'm afraid. I guess paying our house off makes even more sense now. The $12000 of interest will no longer be a factor if the $24000 standard deduction will shake out to the same amount. Hmmmmm. I was certain we would pay more in this new tax plan but now I can't support my hunch having used this calculator. I guess we will save the $375 we used to pay our CPA. So for us, we do not save any money but we also do not pay any extra than we are paying now. We will still pay $12,000 in CA state income tax and will get no relief for that. I guess they call that a sunshine tax, eh?

I checked my numbers on this calculator and the results were the same as my hand calculation....We'll pay about 7% more. My numbers are quite similar to yours so I am puzzled that the plan could produce very different results for similar income levels. One thing I noticed is that this calculator does not include the flexible family credit of $300 each for taxpayer and spouse so your results will be a bit better and mine are not as bad ( but I will still pay more under the new plan).

 

[gindie]

For those of us with college students, there are major changes in the education benefits. For me, this was a very costly change. The use of US Savings Bonds as an educational savings vehicle has been rescinded, along with the deduction for student loan interest. I had half of my son's projected college costs in US Savings Bonds, the other half in 529 plan. I could move the money into the 529 plan, but that pushes up my AGI and with this change so late in the year, I've little wiggle room and will be running into the phase out of the interest deduction.

This is not passed law. Don't do anything this year, as most everything wouldn't go into effect until next year.

 

[43210]

Using this calculator:
https://www.marketwatch.com/story/the-new-trump-tax-calculator-what-do-you-owe-2017-10-26...

Apart from being oversimplified, whoever set up that calculator does not seem to understand how the new CTC works and/or cannot communicate it properly. I wouldn't rely on that calculator. At least you should try to reproduce the result yourself.

 

[Travelfreek]

Also, the elimination of the personal exemptions will cost us another $2000 in taxes since we will lose the $8100 of exemptions (4050 x 2). This additional amt of taxable income will be taxed at the 25% rate.

 

[Travelfreek]

I checked my numbers on this calculator and the results were the same as my hand calculation....We'll pay about 7% more. My numbers are quite similar to yours so I am puzzled that the plan could produce very different results for similar income levels. One thing I noticed is that this calculator does not include the flexible family credit of $300 each for taxpayer and spouse so your results will be a bit better and mine are not as bad ( but I will still pay more under the new plan).

Okay, we will pay 6% in fed tax more since we lose the personal exemptions. (will owe about 32500 vs 30050).

 

[ncbill]

Are there any calculators yet that reflect what will happen when many of the initial provisions intended to soften the impact expire in 2027?

 

[chemist]

Loss of the horse race Roth conversion will impact me. 2017 was the first year I tried it, since I have been managing my MAGI to be below 160K for the AOTC.

Wanted to convert $78K this year so set up 3 new Roth IRAs. Converted 3x $78K into TSM, TISM, and TBM in January. TSM grew to $90K, TBM to $80K, TISM to $94K.

Called Vanguard and recharacterized the two losing horses on Monday. Don't want to take a chance on the start date of the recharacterization ban moving from 1/1/2018.

I am 62 and hoped to be running horse races every year until I draw SS at age 70.

 

[Senator]

When the tax law is so complex that an average person needs an accountant, there is a problem with the law. I do not use an accountant, and use TurboTax.

Whenever they do, if it simplifies the filing process, I support it. Taxes have to be paid. Clearly Government spending is higher than tax revenues, so more tax needs to be paid. Cutting spending is out, and always will be. Plenty of people do not pay taxes, yet collect much of the benefit from them. That likely will not change either.

Some people will pay more, some less. There will be plenty of folks that cry victim the changes no matter what changes, yet they will not want to pay more taxes themselves.

Bring it on.

 

[MichaelB]