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Old 10-07-2017, 11:34 PM   #21
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From what I remember, the tax changes can be back dated to when legislation was submitted.... now, that may be tax increases, but they have been implemented on dates prior to them being signed...

As for increasing donations, unless you plan to do a lot then it might not be worth it... they say the standard deductions will double... if that is true then I will never itemize again.... right now I have to double up to get it every other year...
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Old 10-08-2017, 02:05 AM   #22
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Originally Posted by audreyh1 View Post
Charitable contributions will have to exceed $12K to have any benefit beyond the standard deduction, so I'll probably be batching any future contributions to my Donor Advised Fund, since I supposedly won't be able to use other deductions to get over the standard deduction threshold.

Personally, I'm more concerned about the hit in Medicare rates if we exceed certain income thresholds in 2018, so I may realized some gains this year instead of next.

But ultimately, I am also planning based on the current tax code.

But I am taking all my deductions this year, which makes sense since we made a large charitable contribution. But it's also in case those other deductions disappear.


+1
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Old 10-08-2017, 04:51 AM   #23
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My only comment is that I'm surprised that anyone thinks they can predict what will finally emerge from the free-for-all our Congresscritters will be engaged in over tax law changes. And to be concerned about making specific plans now is taking it even a step farther. You all are way more confident than I am.
That was my initial thought when I first read the OP.
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Old 10-08-2017, 06:17 AM   #24
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Charitable contributions will have to exceed $12K to have any benefit beyond the standard deduction, so I'll probably be batching any future contributions to my Donor Advised Fund, since I supposedly won't be able to use other deductions to get over the standard deduction threshold.

Personally, I'm more concerned about the hit in Medicare rates if we exceed certain income thresholds in 2018, so I may realized some gains this year instead of next.

But ultimately, I am also planning based on the current tax code.

But I am taking all my deductions this year, which makes sense since we made a large charitable contribution. But it's also in case those other deductions disappear.
I am more concerned that Medicare becomes non-viable. Both 2018 budgets reduce Medicare by $.5 Trillion. That will accelerate the current trend of providers dropping Medicare. I sign up for Medicare starting in January but my long term financial plan still assumes it is either gone or from an economic standpoint, we end up paying as if it were gone. As for the tax code, I doubt it will be retroactive. Finally, the $12K threshold is a bit of a red herring. While the standard deduction does increase to $12,000, personal exemptions go away. Today, a single taxpayer has $4,050 exemption + $6,300 std deduction (Single, under 65). That totals $12,350. Increasing the deduction to $12,000 actually is more or less breakeven
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Old 10-08-2017, 07:15 AM   #25
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I'm adding a +3 to the skeptics. The proposals appear geared almost surgically to polarize the Hill and even split the authors' party to some degree. Anything that stands a chance to be passed will undoubtedly be substantially changed from the current proposals.
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Old 10-08-2017, 07:38 AM   #26
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Nothing really for me to do. Change in tax brackets not a concern for my planning as I'm driven around MAGI ACA limits for subsidy. Already tracking and forecasting my income (interest, dividends, capital gains, 401K w/d) which is reported in Quicken. I've also estimated my deductions.

If any changes to deductions takes place I'll update my deduction estimates accordingly, bunch those into this year (such as additional mortgage payment, charitable contributions, RE taxes) in this year and tweak my EOY LTCG (sell / buyback to harvest at 0%) and 401K w/d accordingly to still maximize MAGI for ACA subsidy limit. However I'd put the chance of any change to this year's taxes at <1% probability.
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Old 10-08-2017, 08:26 AM   #27
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Oh, I forgot the proposal that personal exemptions go away. Then doubling the standard deduction does nothing extra.

Boy that does hit households with more than two people!
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Old 10-08-2017, 08:26 AM   #28
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I'm adding a +3 to the skeptics. The proposals appear geared almost surgically to polarize the Hill and even split the authors' party to some degree. Anything that stands a chance to be passed will undoubtedly be substantially changed from the current proposals.
There is a lot for people to scream bloody murder about.
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Old 10-08-2017, 08:37 AM   #29
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Oh, I forgot the proposal that personal exemptions go away. Then doubling the standard deduction does nothing extra.

Boy that does hit households with more than two people!
I think the intent is to have some child/dependent credits to offset this but the "blueprint" is so vague it just goes to show that there really is no way to plan around it at this stage. Nine months have produced nine pages. At this rate, it will go to the floor in 2050 I figure.
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Old 10-08-2017, 09:22 AM   #30
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This is a thread about tax planning. It would be a good idea to keep the politics out of the discussion.
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Old 10-08-2017, 11:31 AM   #31
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I'm planning assuming no change... based on current tax code. Luckily, any manuvers would be done near year end so we'll presumably know by then what rules we are operating under and I'll make changes if necessary.
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Old 10-08-2017, 12:13 PM   #32
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I don't consider the "talking points" being discussed... No bill has come out of committee yet and there are two very different legislative chambers that will have to agree. I won't worry/plan for any tax cuts/changes/reforms until it is much farther along in the process.

For now I consider MAGI for ACA purposes and, like SecondCor521, I am in the FAFSA EFC window for my junior in high school.... That's more significant, financially. We meet with a consultant (free) on how to plan for your FAFSA EFC in 2 weeks... I suspect I'll be told to stop doing Roth conversions for the next several years to reduce my taxable income even more.

I'm not earning w2 income - but we have rental income, RMDs from a beneficiary IRA, DHs SS, and small (tiny really) pensions. Those are factors I can't control - so roth conversions is the only lever I have to reduce FAFSA EFC.
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Old 10-08-2017, 12:35 PM   #33
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We meet with a consultant (free) on how to plan for your FAFSA EFC in 2 weeks... I suspect I'll be told to stop doing Roth conversions for the next several years to reduce my taxable income even more.
You probably will be enlightened to the fact that the assets that go into the EFC formula do not include retirement assets, and oh, by the way, I can sell you an insurance product (probably a variable annuity) that's considered a retirement asset. Of course you know to run the other way from that product. If you're convinced that getting discounts (grants and scholarships) will happen, you could fund a low cost variable annuity from Vanguard, Fidelity, etc. Those can be had for just 0.3% over the underlying fund's fees. But when you withdraw, you don't get the tax advantage of capital gains, and unless you annuitize, your gains must come out before your principle.
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Old 10-08-2017, 04:44 PM   #34
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Today, a single taxpayer has $4,050 exemption + $6,300 std deduction (Single, under 65). That totals $12,350. Increasing the deduction to $12,000 actually is more or less breakeven
Does it? My eyeball math says $10,350.
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Old 10-08-2017, 06:01 PM   #35
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To play the odds I figure to bunch into 2017 the deductions that may go away in 2018. That means shift as much state and local tax into 2017 as practical. The same can be done with non-time-critical medical expenses. Conversely, deductions that sound likely to survive beyond 2017, such as contributions and mortgage interest, I plan to delay into 2018. This approach works regardless of whether tax reform happens or not.
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Old 10-08-2017, 08:22 PM   #36
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^^ If tax rates will be decreased with the Tax Reform proposed, wouldn't it be advantageous to bunch your contributions and mortgage interest into this year?
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Old 10-08-2017, 08:40 PM   #37
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That seems more uncertain, at least I've not seen ideas as to the dollar ranges of the possible new brackets.
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Old 10-08-2017, 09:08 PM   #38
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Folks - keep in mind.... the stuff being talked about by the talking heads on tv is NOT actual legislation.... If and when something comes out of committee... then we might be able to discuss it.

I worked in software for 3 decades... tax reform is still in the state we called "vapor-ware"!!!
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Old 10-08-2017, 09:13 PM   #39
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That seems more uncertain, at least I've not seen ideas as to the dollar ranges of the possible new brackets.
Yeah, nothing on the $ ranges of new brackets, but at face value it's supposed to reduce individual tax rates, also touted as being a tax reduction for middle class. Mortgage interest, while not fully eliminated from deduction, may be some watered down deduction.

I have my doubts on if anything gets accomplished, but as they say a bird in the hand.... or rather a dollar in the hand in this case...
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Old 10-08-2017, 09:19 PM   #40
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Does it? My eyeball math says $10,350.
Ah, thanks. Fat fingered my total. Main point is that "doubled" is marketing right now. Doesn't really matter. Tax reform is a long process. last one took over two years. I'm not changing any of my pro-forma tax returns.
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