House version or Senate version

[ripper1]

I know it is not law and do not want to speculate but wondering who here think the current drafting of house or senate version of tax plan is better for them. I would say the house version because the 12% bracket is extended to 90k whereas the senate version of 12% bracket only goes to 77.4k after which you end up in the 22.5 bracket.

[pb4uski]

Probably not different enough to justify burning any brain cells on. Sorry.

[43210]

There's a lot more to it than the brackets.

For me, house is better because the senate proposes to get rid of separate limits for 401k/403b and 457b, so I could tax-shelter $24.5k less. Also they propose to impose the 10% early withdrawal penalty on 457b's just like the other plans (instead of not having the penalty on 457). These changes make things more "fair" though worse for me, so I'm okay with it.

[mod edit]

[43210]

Quote:

Originally Posted by pb4uski Probably not different enough to justify burning any brain cells on. Sorry.

For me, my AGI with the senate plan would be 3 or 4 times as much as my AGI with the house plan! Very different!

[Midpack]

Quote:

Originally Posted by pb4uski Probably not different enough to justify burning any brain cells on. Sorry.

+1. If they pass something it’ll be different anyway. And I’m not interested in what’s best for me, I’m interested in what’s best for ALL concerned. Porky will be along eventually...

[ripper1]

Quote:

Originally Posted by pb4uski Probably not different enough to justify burning any brain cells on. Sorry.

To me 12.6k more to keep under the 12% is plenty enough to burn brain cells on.

[devans0]

I ran our numbers to see what truth there is on the claims. I did so on our fixed income and then including our investment income. Either way, we will be paying much more in taxes, thousands more. The bull in the China shop approach doesn't allow people to adjust their circumstances.

Also, the proponents spin doesn't meet my smell test. I can't believe that I am that much of an outlier on this.

[43210]

Quote:

Originally Posted by Midpack +1. If they pass something it’ll be different anyway. And I’m not interested in what’s best for me, I’m interested in what’s best for ALL concerned. Porky will be along eventually...

I can't help myself, making contingency plans for the various scenarios - it's like a hobby. I realize it'll all get changed again, but I feel like it's been worthwhile thinking about various tax strategies. There's (at least) two very different versions of 2018 for me, depending on what the final version is.

[MBAustin]

I've decided it's not worth wasting energy or brain cells on "what if-ing" this tax bill. When something is finally signed into law, I'll deal with it then. Right now my brain cells are working on Thanksgiving and Christmas plans and that's plenty for them!

[Ronstar]

Quote:

Originally Posted by Midpack ....Porky will be along eventually...

History shows you to be correct. But stay on topic as to the specifics of each proposal and how they affect you - then the discussion may continue. Stay away from talk about “fairness”, and away from anything partisan.

[REWahoo]

Quote:

Originally Posted by MBAustin I've decided it's not worth wasting energy or brain cells on "what if-ing" this tax bill.

+1

I'm still not convinced a tax bill will actually pass, and if it does, no way will it contain the same provisions everyone here is spending time strategizing.

[aaronc879]

If a bill is signed would it be effective for 2018?

[Spock]

I'm engineering myself to the top of the bottom bracket.

For apples-to-apples comparison, I'll use the same income in 2018 as I'll have in 2017 because the average wage earner is not going to be able to increase income to make take advantage of more headroom in a given tax bracket.

The (current) house plan saves me a whopping $13 dollars a year (increases std ded but increases the tax rate 20% from 10% to 12%) I'll try not to spend it all in one place.

The senate plan would save me $320 on the same income... (increases std ded AND keeps rate at 10%). With that I can take my wife out for breakfast at the diner once a month... not exactly a game changer for Joe Sixpack.

While I was a trickle down believer, Megacorp has kabillions of cash in hand now that they are not investing. Plus at todays interest rates Megacorp can borrow what they want for almost free... cutting their tax rate by almost 1/2 is not going to suddenly incent them to spend more on liveware or hardware (IMHO).

Neither plan is going to get the voters in "fly over America" excited.

[scrabbler1]

Because I am on the edge between bunching versus not bunching deductions into 2017-2018, and the key "bunchable" deduction is state income taxes, I need to have a game plan before the end of 2017 so I will know when to make my 4th quarter estimates state income tax payment, in December or early January.

[audreyh1]

The Senate version preserves the medical expense deduction. This does not impact many people, but for a few it is huge.

You still have to get above 10% AGI and expenses have to exceed the new bigger (combined) standard deduction for it to reduce taxes. So the bar is pretty high.

[audreyh1]

Quote:

Originally Posted by aaronc879 If a bill is signed would it be effective for 2018?

The bills specifically say for 2018 on, so I think the answer is yes.

[gayl]

I'll venture in, we've run DS/DD/me:
♤ me - I don't itemize so about the same
♡ DS - House better than Senate, worse under both (MFJ 3kids, itemizes)
◇ DD - Low income, better with House
♧ GS1 - will have 7-10k SL on graduation, no idea but think House, actually no sure what he makes (FT student / employee)

[David1961]

Does either version talk about changing the tax rates for dividends or long-term capital gains?

[audreyh1]

Quote:

Originally Posted by David1961 Does either version talk about changing the tax rates for dividends or long-term capital gains?

No.

[AndyS]

I tend to think the final bill will end up looking a little bit more like the current Senate version than the current House version .... and whatever that ends up being the House will vote for it. Too much political credibility on the line not to pass something and the margins for passage are slimmer in the Senate than in the House.

But it's not done yet.