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Old 12-21-2017, 06:26 PM   #41
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I read that there is an IRS opinion that this won't work.


Where did you read this? Everything I have read so far relates to state income taxes only. If your municipality accepts RE taxes paid in advance you can pay up to 12 months in advance per IRS code. I have had two conversations with my CPA on this point in the last two weeks, one before the reconciliation bill and one after. Iíve confirmed with my Town that they will accept payments in advance and have arranged to pay a full year in advance on 12/28 of this year.
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Old 12-21-2017, 06:35 PM   #42
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How about medical expenses (premiums, deductibles and co-pays)? We also purchase LTC and those premiums are deductible. Of course, there is a floor of 10% of AGI before deductability can occur.



We are prepaying January's estimated state taxes.


Law has changed to reduce the rate to 7.5% od AGI for 2017 and 2018, so a big help for this year if you itemize.
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Old 12-21-2017, 07:40 PM   #43
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So for example, say a taxpayer's state tax bill is usually $4,000 a year and they make 4 $1,000 estimated payments but the actual tax ends up being $3,500. The $500 excess is simply estimated error and legitimately deductible in 2017 and is income in 2018.

OTOH, if under the same fact the taxpayer made a $5,000 estimated payment in December, then at least $4,000 would be disallowed because it was prepayment of 2018 taxes.
I am not saying to do this, but after it is all said and done, the difference in taxes that are owned is going to be negligible in the IRS eyes.

A $4,000 state tax deduction, taken this year, or next, will likely be less than a $500 difference in the amount of taxes owed by the taxpayer. If you pay it this year, you cannot take it next year. The overage this year will be income next year.

The IRS will be looking for larger fish to fry, unless it comes in on a W2, K1, 1099 or some other electronic verification. If it comes in on those types of forms, even 0.01 will be scrutinized.
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Old 12-21-2017, 07:56 PM   #44
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Just sent a 2 checks to the town, hope they cash them.
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Old 12-21-2017, 08:14 PM   #45
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Well I have alway paid my whole property tax bills when they came in. I just did so in November. I also have always paid extra (state and federal) income tax and just rolled it over to the following year. It won't help me though. My deductions (which have come from SALT) have been eaten away by the AMT. Next year since the deductions will be so small, the ATM should not apply since I will be paying more taxes in any event.
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Old 12-21-2017, 08:20 PM   #46
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Prepaid my 2018 church pledge in full. Paid my January installment of property tax in December (which I have always done anyway). I won't be itemizing next year.
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Old 12-21-2017, 08:31 PM   #47
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Due to the new tax bill, next Tuesday or Wednesday (i.e., after the Christmas hubbub):

I'm going to help my Dad make an estimated state income tax payment for his probable liability for TY2017 since he will be able to itemize for 2017 but not for 2018 and his tax bracket will drop.

I'm going to carefully estimate my AGI and do a Roth conversion up to close to the FAFSA auto zero EFC AGI limit because I have a junior in high school who will be completing the FAFSA next October 1st using my 2017 tax information.(*)

Other year end things I'm doing that I was planning to do anyway:

I'm going to help my Dad make a distribution from a marital bypass / credit shelter trust to himself because the tax rates for trust income is higher than for single taxpayers.

(*) As discussed elsewhere, I was planning to Roth convert to that limit anyway, it is just the precision AGI estimation and staying below the cliff parts that are new. If the tax bill had not passed, I would have overconverted by a lot and then recharacterized once I got all my tax information.
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Old 12-21-2017, 09:28 PM   #48
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interest on mortgages & HELOC for acquisition & improvements will be deductible on 750k of loan. Interest on HELOC for debt consolidation won't be


Not according to an article I read as well as my CPA. Interest on a HELOC is unfortunately no longer deductible regardless of whether total mortgage debt is below the $750K threshold.

If you have a different authoritative source, please share. Thanks.
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Old 12-21-2017, 09:45 PM   #49
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Not according to an article I read as well as my CPA. Interest on a HELOC is unfortunately no longer deductible regardless of whether total mortgage debt is below the $750K threshold.

If you have a different authoritative source, please share. Thanks.


Actually I just googled it and found another article that said interest on HELOCís up to $100K will still be deductible as long as funds were used for home improvement. I sent the link to my CPA and asked him to confirm.
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Old 12-21-2017, 09:49 PM   #50
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Can you give me a little detail on this please? I was planning to apply and take out a HELOC in 2018. I hadn't heard of anything in the tax bill that affects the deduction of the interest on HELOCs, but it feels like information overload any time I look at news stories on the tax legislation.


Iím not clear now because I read conflicting information, but the latest article I read said that interest on a HELOC balance of up to $100K will still be deductible if funds were used for home improvement. Iím asking my CPA to confirm.
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Old 12-21-2017, 10:01 PM   #51
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How about medical expenses (premiums, deductibles and co-pays)? We also purchase LTC and those premiums are deductible. Of course, there is a floor of 10% of AGI before deductability can occur.

We are prepaying January's estimated state taxes.
There is a floor of 7.5% of AGI for 2017 and 2018.
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Old 12-21-2017, 10:09 PM   #52
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We’ve made large donations to our DAF over the past two years (2016, 2017) due to unwinding a long held stock position. It frontloads our DAF with about 10 years worth of donations.

I don’t think bunching every other year will work for us anymore with the new standard deduction/no exemptions plus $10K limit on itemized taxes. Unless we have another big charitable donation, but we just did that.

Of course we will re-evaluate in a few years.

Well, unless we suddenly have high medical expenses. Knock on wood that doesn’t happen.
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Old 12-22-2017, 12:09 AM   #53
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I’m wondering if any of you are facing the same IRA/401K questions that I am facing. This question is for people like me who are not yet retired, but are trying to plan for ER. As I understand it, only the corporate tax cuts in the bill are permanent. The individual tax cuts are not, and for many, the tax rates will be higher in 2027 than they otherwise would have been.



In recent years, I’ve been deferring taxes instead of doing the Roth route. This had a couple of advantages. First, it dropped my marginal tax rate down into the 25% category. Under the new plan, I will be in the 24% tax bracket no matter what. Second, I had been assuming that my tax bracket would be lower in retirement than it was when I earned the money and put it in my deferred retirement accounts. But, now, it’s not as clear that this will be the case, or at least not to the same degree.



So, does it make more sense to now put money in Roth accounts instead of traditional 401Ks/IRAs? So, should I switch to Roth accounts now?
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Old 12-22-2017, 04:39 AM   #54
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I’m not clear now because I read conflicting information, but the latest article I read said that interest on a HELOC balance of up to $100K will still be deductible if funds were used for home improvement. I’m asking my CPA to confirm.
Your CPA is weeding through the same 1097 pages as the rest of us (think its on pgs 595-600) ... confusion reigns. But Motley Fool usually is close:

https://www.fool.com/investing/2017/...omeowners.aspx
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The proposed tax bill would also eliminate a common way for homeowners to use home equity loans to score tax-deductible financing. Interest paid on home equity loans that aren't considered home acquisition debt will no longer be tax deductible under the GOP tax plan. ...The GOP tax plan closes this "loophole" for using home equity as a cheap source of consumer financing.
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Old 12-22-2017, 05:00 AM   #55
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I’m wondering if any of you are facing the same IRA/401K questions that I am facing. This question is for people like me who are not yet retired, but are trying to plan for ER. As I understand it, only the corporate tax cuts in the bill are permanent. The individual tax cuts are not, and for many, the tax rates will be higher in 2027 than they otherwise would have been.



In recent years, I’ve been deferring taxes instead of doing the Roth route. This had a couple of advantages. First, it dropped my marginal tax rate down into the 25% category. Under the new plan, I will be in the 24% tax bracket no matter what. Second, I had been assuming that my tax bracket would be lower in retirement than it was when I earned the money and put it in my deferred retirement accounts. But, now, it’s not as clear that this will be the case, or at least not to the same degree.



So, does it make more sense to now put money in Roth accounts instead of traditional 401Ks/IRAs? So, should I switch to Roth accounts now?
I am in the same boat. To date, we've contributed to 401k accounts to stay at the top of the 25% bracket. In other words, we've avoided taxes at a 28% rate on those contributions. I have cut back on the new contributions so that we will now be at the top of the new 22% bracket, thereby avoiding taxes at a 24% rate on the contributions we will be making to 401k accounts.

I expect we'll stay in the 22% bracket when we retire in 18 months, and potentially go back up to 25% in 2027. For the next 8 years after that (at least), we'll convert enough from our 401k accounts to a Roth each year to push us to the top of the 22% bracket.

It doesn't make sense to me to avoid taxes at 22% now only to take distributions and pay taxes at the same rate or higher in a few years.
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Old 12-22-2017, 06:18 AM   #56
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According to my tax advisor, property taxes can be prepaid as long as the taxing authority is accepting prepayment. In other words, it canít just be a credit to an account, it must be applied to an assessed or estimated current or future tax liability.
Worst case scenario is that it isn't accepted and you resubmit that payment for as much as is allowed in '18, right? Nothing to lose by trying.

Maybe because being from a 'tax everything' state I've become numb to the tax game. I've reached the point that says "just tell me how big a check I need to write and leave me alone".
My combined property, local and state taxes are higher than my Fed taxes. I've long ago told my accountant that I don't want to jump through hoops to save a few nickels.
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Old 12-22-2017, 06:33 AM   #57
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Prepaid my 2018 church pledge in full. Paid my January installment of property tax in December (which I have always done anyway). I won't be itemizing next year.

Ditto on the church dues.


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Old 12-22-2017, 06:52 AM   #58
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According to my tax advisor, property taxes can be prepaid as long as the taxing authority is accepting prepayment. In other words, it canít just be a credit to an account, it must be applied to an assessed or estimated current or future tax liability.

An early payment of a second installment would qualify, as would an early payment when the county has not yet assessed but offers to accept prepayment and apply to the upcoming assessment.

A payment where there is no acknowledgement of forthcoming liability would probably not qualify.
DC announced that they were accepting prepayments and included a link to the online payments site. I prepaid. AMT is not an issue for us.
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Old 12-22-2017, 06:58 AM   #59
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I'm going to carefully estimate my AGI and do a Roth conversion up to close to the FAFSA auto zero EFC AGI limit because I have a junior in high school who will be completing the FAFSA next October 1st using my 2017 tax information.(*)

(*) As discussed elsewhere, I was planning to Roth convert to that limit anyway, it is just the precision AGI estimation and staying below the cliff parts that are new. If the tax bill had not passed, I would have overconverted by a lot and then recharacterized once I got all my tax information.
Wouldn't the conversion make more sense after your son is done with College? Any converted dollars become "available" as income. CSS profile schools will love you if you make that conversion.
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Old 12-22-2017, 09:38 AM   #60
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Law has changed to reduce the rate to 7.5% od AGI for 2017 and 2018, so a big help for this year if you itemize.
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Originally Posted by audreyh1 View Post
There is a floor of 7.5% of AGI for 2017 and 2018.
Thanks - I hadn't seen that. Is that only for taxpayers above age 65, or for all?
Seems like this would be a bigger deal in 2017 when the standard deduction is lower.
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