Release of final tax bill details

[Amethyst]

LOL well said

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Originally Posted by Gumby Y It is what it is, and the best we can do is figure out how we will deal with it. When you get yourself elected to Congress, you can change it. .

[mpeirce]

Much thanks from me as well. There is a lot of actionable information on this subject here.

Are the problematic postings from established members (who should know better) or newbies?

[W2R]

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Originally Posted by mpeirce Much thanks from me as well. There is a lot of actionable information on this subject here. Are the problematic postings from established members (who should know better) or newbies?

You're welcome. Our mod team is dealing with it with our usual discretion, and just wanted to make a public plea to our members to please watch what they post.

[JoeWras]

These threads have been extremely useful to my planning. With ER finally looming next year, the timing is really important.

Oh, and it has also gotten me off my duff and into reading the actual bill. I haven't done something like that in a while!

As usual, the "collateral improvement" to me is hearing you all speak out loud about your strategies. I learn something every day on these threads.

Thank you!

[Helena]

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Originally Posted by Golden sunsets But as I understand it the "additional standard deduction for age or blindness" has been eliminated, as other posters have pointed out. Am I correct? Sent from my iPad using Early Retirement Forum

I am still somewhat confused about this myself. I have seen conflicting information on the internet, but at present I am unable to access the actual bill on line myself.

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[catotx]

Another change is that interest from HELOC can no longer be deducted. This makes keeping a HELOC for living expenses less useful (for those who wants to keep income low for ACA purposes).

[Helena]

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Originally Posted by jimnjana not if the marginal tax rate they pay goes down.

I wasn't referring to the tax rate.

Under current IRS rules, my tax exempt amount in 2018 would be $12,250.00 [which includes standard deduction $6500, additional over age 65 standard deduction $1600 and personal exemption $4150.] So the tax bill's $12,000.00 standard deduction by itself [assuming they have eliminated the extra over age 65 deduction] would be $250 less. I lose $250 right out of the gate.


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[Helena]

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Originally Posted by MBSC Ugh. The additional standard deduction remains.

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Originally Posted by audreyh1 REWahoo my reading is that it is retained. The language is in the above post.

I hope you're right !!

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[Helena]

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Originally Posted by latexman I entered my actual 2016 1040 numbers into the Max Lott Tax Calculator, and the new tax rules would have cost me $1094 more! Not a good sign!

I tried that Lott tax calculator last night but it did not ask if I was over 65... so that also confused me [if the extra over age 65 deduction was retained.]

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[socca]

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Originally Posted by donheff Does anyone know how the pass through income deduction works?

I read this part of the bill, but I don't understand it. The bill seems to specifically exclude treating this as an adjustment to total income (AGI: 2016 1040 Line 37). Perhaps the intention is to somehow directly reduce total income (TI: 2016 1040 Line 22). If so, how? Don't know.

I'm not worried about it. If the bill becomes law, it will be up to the analysts and software engineers at the major tax prep companies to figure out how to implement it. Not my problem.

[Helena]

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Originally Posted by W2R [ADMIN hat on] The mod team is being overwhelmed by posts on this thread that are political, partisan, or related to class/race wars or other topics that our members clearly know are not appropriate for this forum. We are TRYING to keep the thread open so that some constructive discussion of the tax bill and how retirees can plan for tax efficiency under the new tax laws, may continue. Please, please, please.... I would just ask that you THINK before you post. If you want to discuss the above or other incendiary topics, please do so at some other website. [/ADMIN hat]

It's sometimes difficult and confusing but it's a very timely and important subject. I appreciate all the helpful informative posters and the mods who keep us on topic.

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[Gotadimple]

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Originally Posted by Helena I wasn't referring to the tax rate. Under current IRS rules, my tax exempt amount in 2018 would be $12,250.00 [which includes standard deduction $6500, additional over age 65 standard deduction $1600 and personal exemption $4150.] So the tax bill's $12,000.00 standard deduction by itself [assuming they have eliminated the extra over age 65 deduction] would be $250 less. I lose $250 right out of the gate. .

Circling back on the aged and blind standard deduction. It is retained according to the PDF (footnote #13). Here's the footnote from the page 537:

13 For 2017, the additional amount is $1,250 for married taxpayers (for each spouse meeting the applicable criterion) and surviving spouses. The additional amount for single individuals and heads of households is $1,550. An individual who qualifies as both blind and elderly is entitled to two additional standard deductions, for a total additional amount (for 2017) of $2,500 or $3,100, as applicable.

So a single individual who does not itemize and who is aged can claim:
$12,000 + $1,550= $13,550
If they were also blind, the total would be $12,000+$3,100=$15,100

With limits on some itemized deductions on Schedule A, this might be enough to eliminate the need to file Schedule A.

HTH,
Rita

[Walt34]

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Originally Posted by socca I'm not worried about it. If the bill becomes law, it will be up to the analysts and software engineers at the major tax prep companies to figure out how to implement it. Not my problem.

That's kind of my position on it too. There's nothing I can do about it other than perhaps writing an email to my congresscritters and what will be will be.

https://www.youtube.com/watch?v=azxoVRTwlNg

[jimnjana]

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Originally Posted by Helena I wasn't referring to the tax rate. Under current IRS rules, my tax exempt amount in 2018 would be $12,250.00 [which includes standard deduction $6500, additional over age 65 standard deduction $1600 and personal exemption $4150.] So the tax bill's $12,000.00 standard deduction by itself [assuming they have eliminated the extra over age 65 deduction] would be $250 less. I lose $250 right out of the gate. .

You don't lose 250 if your tax rate has gone down. You will have 250 more dollars taxed at a lower rate.

[43210]

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Originally Posted by socca I'm not worried about it. If the bill becomes law, it will be up to the analysts and software engineers at the major tax prep companies to figure out how to implement it. Not my problem.

I don't understand this. There are all kinds of decisions I can make and control for tax year 2018 and beyond, starting right now. It's definitely worth understanding it when some tax-planning can save thousands of dollars. If you wait for tax software for tax year 2018 (maybe a year from now) it could be too late. You might realize you went over some number by $1, and so cost yourself thousands of dollars (there are many such "cliffs", as well as steep phaseins and phaseouts). You could say "oh well, there was nothing that could have been done", but it wouldn't change the fact that a $1 mistake cost thousands of dollars.

[Helena]

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Originally Posted by Gotadimple Circling back on the aged and blind standard deduction. It is retained according to the PDF (footnote #13). Here's the footnote from the page 537: 13 For 2017, the additional amount is $1,250 for married taxpayers (for each spouse meeting the applicable criterion) and surviving spouses. The additional amount for single individuals and heads of households is $1,550. An individual who qualifies as both blind and elderly is entitled to two additional standard deductions, for a total additional amount (for 2017) of $2,500 or $3,100, as applicable. So a single individual who does not itemize and who is aged can claim: $12,000 + $1,550= $13,550 If they were also blind, the total would be $12,000+$3,100=$15,100 With limits on some itemized deductions on Schedule A, this might be enough to eliminate the need to file Schedule A. HTH, Rita

Interesting... thank you for posting this.

This opens up another can of worms.

Why give the over age 65 extra standard deduction amounts for 2017 ?

The IRS has already issued the inflation-indexed new amounts for 2018.

The tax bill would come into effect in 2018... but are we expected to use these 2017 amounts ??

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[Walt34]

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Originally Posted by 43210 I don't understand this. There are all kinds of decisions I can make and control for tax year 2018 and beyond, starting right now. It's definitely worth understanding it when some tax-planning can save thousands of dollars.

Well, as the lawyers say, "that depends".

For us, our main sources of income are a pension and SS, with a dribble of dividends. We haven't itemized for almost two decades. I have an IRA but I haven't touched it yet and don't plan to for another five years. While we do have property taxes, compared to some others I've seen here ours are laughably low.

So as I see it there really isn't much, if anything, that I can do to manipulate income and expenses for tax purposes.

[43210]

Some people have mentioned this tax calculator.
Tax Plan Calculator by Maxim Lott
Read the disclaimers "About this site and FAQ"
Tax Plan Calculator by Maxim Lott
and be aware that it is super-simplified with very basic features, though it appears correct in the hypothetical case where these few features were the entire tax code. Real results can be drastically different, so you need to know all the additional features that apply to you and realize they are not in this calculator. And for comparison, some major news websites have been having tax calculators that are more limited and error-prone, without disclosing the limitations.

[easysurfer]

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Originally Posted by socca .... I'm not worried about it. If the bill becomes law, it will be up to the analysts and software engineers at the major tax prep companies to figure out how to implement it. Not my problem.

+1.

I'm not gonna get a shook up and wait til all the possible future law gets sorted out by the folks you mentioned .

[socca]

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Originally Posted by Walt34 Well, as the lawyers say, "that depends". ... So as I see it there really isn't much, if anything, that I can do to manipulate income and expenses for tax purposes.

My pass-through income "is what it is" - no option for playing around with it to minimize taxes. Other folks might be in a different boat.

Pass-through income is a substantial part of my overall income, so I will be very interested to see how this all plays out.