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Old 05-27-2020, 02:50 PM   #121
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I do taxes for multiple clients. Raising the standard deduction and elimination of the 2% Misc was great for a large part of the population. It certainly made it easier to DIY.. No more Form 2106, (Truck Drivers not happy) No more "guessing" how much was donated to charity, no more "estimating" the value of that goodwill household goods value. Some still bring stacks of medical receipts believing it will help reduce taxes only to find out they don't come close to the thresholds. The toughest part is explaining that to them!! I hope it stays this way. Ill bet AARP tax help folks do too!
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Old 05-27-2020, 04:04 PM   #122
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I do the taxes for myself and 2 friends, as I have for the last 15+ years. For my ladyfriend, before 2013 sometimes she itemized, sometimes she took the standard. Her property tax deduction was once every 2 years, so there was a built-in bunching of that deduction which made the difference. When that disappeared, it was standard deduction all the way, as her SALT by itself wasn't enough. Raising the standard only increased the difference.


My best (male) friend had been itemizing since 2012, the year after he bought his co-op apartment. His mortgage interest and SALT put him over the SD amount. When his mom died in 2012, he used some of his inheritance to pay off the mortgage. His SALT and much lower mortgage interest kept him itemizing, but not by much. When the SD doubled in 2018, he switched to the standard.


My own situation is similar to my friend's. I had SALT and deductible medical expenses since 2008 high enough to itemize some years. Bunching some SALT had me taking the standard in other years. When the SD doubled in 2018, that put me out of reach for itemizing any more.


Nobody's taxes will become more complicated solely by doubling the SD. They will be either the same as before or become easier. If you have a change in your personal situation, that could complicate things including allowing you to now itemize. But that would have happened without the SD doubling.
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Old 05-27-2020, 06:16 PM   #123
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As a AARP tax aide volunteer tax preparer, I can tell you that it has simplified things in the sense that when you tell people who come in to our service what the standard deduction is, most of them immediately know that they're nowhere close to that number, that they won't be close to that number in the future, so they can essentially stop tracking all those itemized deductions that they used to keep track of.

Yes, the law could change back, and yes, they should keep an eye on the standard deduction. But for many many people they can stop worrying about tracking their OOP medical, state taxes, contributions to charity, safety deposit box, tax prep, etc. etc. and all the collection and maintenance of the associated forms and reports. It also means for us volunteer tax preparers that most of the time we don't have to type in a bunch of different numbers from a bunch of different forms and see if it's close. We can just take the standard deduction without all of that data entry (which then would need to be double checked for quality in our process) - after of course checking that they're not close.

Out of several dozen returns I prepared this year, there was only one client who was even close enough to where it was necessary to do some quick math, and IIRC that client didn't even exceed the SD.

(And yes, I know that AARP tax aide clientele probably are a different population in terms of those taxpayers who itemize or not.)

Under the previous law for a family of 4:
Let's assume $4050 personal deduction times 4 persons = $16,200
Let's assume a typical mortgage deduction is $10.000
Let's assume a typical state income tax deduction is $4,000
Let's assume a typical property tax deduction is $3,000

All of these numbers can easily exceed $24,000 for a family of 4 and owning a house.

If most of your clients do NOT have many dependents nor a house with a mortgage, property tax, etc, then your comment is correct. However, you probably got the simple tax cases since you are a tax aid volunteer....and not a licensed tax professional.

Those simple tax cases are not representative of everyone...as you already stated. The $24,000 deduction do simplify taxes with relatively simple returns. As far as people with more complicated tax returns with numerous dependents, owning a house, owning a small business, investment returns, etc, the $24,000 deduction did NOT simplify their tax return very much.
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Old 05-27-2020, 07:47 PM   #124
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Under the previous law for a family of 4:
Let's assume $4050 personal deduction times 4 persons = $16,200
Let's assume a typical mortgage deduction is $10.000
Let's assume a typical state income tax deduction is $4,000
Let's assume a typical property tax deduction is $3,000

All of these numbers can easily exceed $24,000 for a family of 4 and owning a house.

If most of your clients do NOT have many dependents nor a house with a mortgage, property tax, etc, then your comment is correct. However, you probably got the simple tax cases since you are a tax aid volunteer....and not a licensed tax professional.

Those simple tax cases are not representative of everyone...as you already stated. The $24,000 deduction do simplify taxes with relatively simple returns. As far as people with more complicated tax returns with numerous dependents, owning a house, owning a small business, investment returns, etc, the $24,000 deduction did NOT simplify their tax return very much.
In your hypothetical the family woudn't need to itemize anymore. Personal exemptions are gone so they would now only have $17k in itemized deductions. With the $10k limit on state and local taxes even some high earners don't have a reason to itemize anymore.
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Old 05-28-2020, 09:34 AM   #125
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There is a long list of reasons why I dislike our tax system, but one that bothers me the most is how our Politicians get to choose winners and losers. Another issue I have is the relatively high cost. When I was working and considered to be in the top half of middle class, over 11 yeas ago, I calculated my total tax liability (Income tax, FICA, Property, Sales, gas tax, hidden taxes and government fees). I was paying about 45% of my gross in direct taxes. If I were able to calculate and add indirect taxation (all taxes, fees and legislation that gets passed through to the consumer) the cost of government would probably be around 60% to 70%.
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Old 05-28-2020, 10:45 AM   #126
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jkern: At a different level TAX system has a social engineering twist. When people marry/divorce/have children/don't have children--- because it has tax consequences..That's now a politician's tool too.
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Old 05-28-2020, 11:39 AM   #127
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our Politicians get to choose winners and losers. Another issue I have is the relatively high cost.
Right, our tax system is now the incentive system. I dont like that either.

Yes the cost is very high, but I'm not sure everyone understands that. I think many people are more (falsely) pleasantly surprised when the discover they thought they were going to pay 22-24% federal taxes (marginal rate) and then Turbo Tax tells them the they actually only paid 14% (effective tax rate).

Most people don't every even make the calculation you did. They have no idea how much is really withheld for SS and Medicare. They also typically have thought they "need" the mortgage interest deduction to pay less taxes - not realizing that 1) It really just effectively lowers your mortgage rate slightly and 2) is countered by the fact you will be paying property taxes
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Old 05-28-2020, 11:40 AM   #128
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I'm on a tear today. Here is a recently released, very long, very technical paper about minimum taxes - including AMT.

My favorite quote so far:
I'm sure no one cares, but I provided the wrong link. This is the correct one.
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Old 05-28-2020, 01:34 PM   #129
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My personal peeve is the "corporate income tax". Sold to the public as if there is a Mr. Exon or Mr. Tesla that looks at their income and pays a percentage to the government. When in reality, they treat income tax as an expense and like any other expense in business it must be gotten from the customer and then passed on the the government. This allows politicians the ability to tell the people I for raising rich corporations taxes not yours.
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Old 05-28-2020, 01:44 PM   #130
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Tax Foundation estimates ~31% itemized before TCJA, it is down under 14% now. I guess >80% are most basic and low income?

https://taxfoundation.org/standard-d...rent-law-2019/
I guess it depends. For us, we would be itemizing under the old tax system because of high property tax bills and medical expenses (under-65 medical, Medicare Parts B/D IRMAA'd, OOP costs). With TCJA, we won't. I figure we'll be out about $300-400 under TCJA even with the lower tax rates. One on SS. One with a pension.
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Old 05-28-2020, 01:55 PM   #131
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My personal peeve is the "corporate income tax". Sold to the public as if there is a Mr. Exon or Mr. Tesla that looks at their income and pays a percentage to the government. When in reality, they treat income tax as an expense and like any other expense in business it must be gotten from the customer and then passed on the the government. This allows politicians the ability to tell the people I for raising rich corporations taxes not yours.
Yup. The purpose of corporate income taxes is to hide the cost of government from the voters. All corps do is collect it on behalf of the government - from owners, employees, or customers. There is no other source of money.
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Old 05-28-2020, 02:04 PM   #132
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Codswollop. Corporations engage in economic activity, and taxing them is no different than taxing others that engage in similar activity. There is no reason to assume that if corporations were not taxed the savings would be passed along to employees or consumers.
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Old 05-28-2020, 02:44 PM   #133
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There is no reason to assume that if corporations were not taxed the savings would be passed along to...consumers.
Sure there is, if a corporation believes it could now make more profit by increased sales at somewhat lower prices.

Employee pay is a somewhat different situation.

And we're talking assumptions, not proven facts....
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Old 05-28-2020, 03:50 PM   #134
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Sure there is, if a corporation believes it could now make more profit by increased sales at somewhat lower prices.

Employee pay is a somewhat different situation.

And we're talking assumptions, not proven facts....
If all their competitors get the same tax break, they will likely be in no better relative position than they were before.
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Old 05-28-2020, 03:56 PM   #135
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If all their competitors get the same tax break, they will likely be in no better relative position than they were before.
True, but absent collusion one could still expect a decrease in consumers' prices if the market is at all efficient.
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Old 05-28-2020, 03:59 PM   #136
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True, but absent collusion one could still expect a decrease in consumers' prices if the market is at all efficient.
Take it from someone who spent years enforcing the antitrust laws - there is plenty of price fixing and market allocation going on. Nobody really wants to compete when they can all make more money if they don't.
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Old 05-28-2020, 04:15 PM   #137
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Take it from someone who spent years enforcing the antitrust laws - there is plenty of price fixing and market allocation going on. Nobody really wants to compete when they can all make more money if they don't.
Yes, but we don't have to pay $1000 for a loaf of bread so some competition does exist.
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Old 05-30-2020, 06:36 AM   #138
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Id certainly be interested in a simplified tax structure. It seems excessively complicated right now.

My wife is finishing up a masters of accounting degree in a few weeks. Shes joining an industry developed to deal with these complicated tax laws. Its sad that this is our reality.

My real complaint is the lack of ability to accurately plan for the future. Tax laws will inevitably change in the future and if I want to plan for an eventual retirement its difficult to try and predict what my future tax burden will be or where I should keep my savings to minimize that burden going forward.

I end up with a blended strategy spreading our savings around in the attempt to structure a portfolio that limits tax liability in the future. Its very difficult to do and one new law could create enough change to render any plan moot.
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Old 05-30-2020, 07:09 AM   #139
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My personal peeve is the "corporate income tax". Sold to the public as if there is a Mr. Exon or Mr. Tesla that looks at their income and pays a percentage to the government. When in reality, they treat income tax as an expense and like any other expense in business it must be gotten from the customer and then passed on the the government. This allows politicians the ability to tell the people I for raising rich corporations taxes not yours.
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Yup. The purpose of corporate income taxes is to hide the cost of government from the voters. All corps do is collect it on behalf of the government - from owners, employees, or customers. There is no other source of money.
Yes. It is a shell game, playing on the emotional side of people who don't understand the consequences.

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There is no reason to assume that if corporations were not taxed the savings would be passed along to employees or consumers. ...
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Sure there is, if a corporation believes it could now make more profit by increased sales at somewhat lower prices.
...
Yes to SevenUp - it is the greed of the corporation that will motivate them to lower prices. If they don't their competitors will, and their competitors will get their business and their profits. So those greedy SOBs will lower the price - how dare they!


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Take it from someone who spent years enforcing the antitrust laws - there is plenty of price fixing and market allocation going on. Nobody really wants to compete when they can all make more money if they don't.
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Yes, but we don't have to pay $1000 for a loaf of bread so some competition does exist.
Again, yes to SevenUp. Sure, there are cases of collusion and price fixing, and they should be dealt with by our legal system. But if this was so widespread, we'd see those $1,000 loaves of bread and we sure wouldn't see sub $2.00 gas in this day and age.

I guess price fixing is OK when the government does it? Subsidies and minimum wage are examples of price fixing.

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Old 05-30-2020, 11:30 AM   #140
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Thank God we have someone who will be a champion for big business. Finally, they can dry their tears and stop trembling in the corner.
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