Release of final tax bill details

[audreyh1]

From CNBC: GOP releases its final tax plan — here's what's in it
https://www.cnbc.com/2017/12/15/gop-releases-its-final-tax-plan--heres-whats-in-it.html

Here are some of the provisions the bill contains, according to a Republican summary:

• The proposal would maintain seven individual income tax brackets at slightly different rates: 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent and 37 percent. The top rate would fall from the current 39.6 percent. The House originally proposed collapsing the system to four brackets, saying it would simplify the filing process. (Click here to see which bracket would apply to you https://www.cnbc.com/2017/12/15/find-your-new-tax-brackets-under-the-final-gop-tax-plan.html.) The changes would phase out after 2025.
• The bill would scrap the personal exemption but increase the standard deduction to slightly less than double its current level. It would go to $12,000 for an individual or $24,000 for a family.
• It would drop the corporate tax rate to 21 percent from the current 35 percent. The change would take effect next year.
• The plan would set a 20 percent business income deduction for the first $315,000 in income earned by pass-through businesses.
• The bill would scrap Obamacare's provision that requires most Americans to buy health insurance or pay a penalty, beginning in 2019. Doing so is projected to lead to 13 million fewer people with insurance and raise average Obamacare premiums, according to the nonpartisan Congressional Budget Office.
• The plan would eliminate the corporate alternative minimum tax, which the Senate added back to its plan at the last second to raise money. House leaders and corporate groups said the tax would stifle research and development. It would also increase the exemption from the individual AMT.
• The estate tax, or so-called death tax, would remain but the exemption from it would be doubled.
• The child tax credit would double to $2,000 per child from $1,000. It would be refundable up to $1,400 and start to phase out at $400,000 in income. The tweak would end after 2025.
• The plan would limit state and local tax deductions. It would allow the deduction of up to $10,000 in state and local sales, income or property taxes.
• It will not change the mortgage interest deduction for existing homeowners. For new homes, taxpayers can deduct interest on up to $750,000 in mortgage debt, down from $1 million currently.
• Tax breaks for charitable contributions and retirement savings plans would remain.
• The bill would not include the controversial first in first out stock sales change, which sparked backlash in the investing community.

 

[foxfirev5]

Audrey, thanks for the update. The actual tax brackets vs just the top are helpful. We'll see what happens.

 

[JDARNELL]

Another benefit of being an ER with kids. Tax credit LOL. Too bad its not a credit on everything I spend on them.

 

[HtownRose]

full text:

Read the Republican tax bill for yourself: Full text of the Tax Cuts and Jobs Act

I'll see if I can find anything on Roth re-characterizations...

 

[audreyh1]

The proposed new tax brackets for 2018 from the linked CNBC article:

See below for a breakdown of the proposed income tax brackets for singles.

Rate	Taxable Income Bracket
10%	0 to $9,525
12%	$9,525 to $38,700
22%	$38,700 to $82,500
24%	$82,500 to $157,500
32%	$157,500 to $200,000
35%	$200,000 to $500,000
37%	$500,000 and up

Here are the proposed rates for married couples who file jointly.

Rate	Taxable Income Bracket
10%	0 to $19,050
12%	$19,050 to $77,400
22%	$77,400 to $165,000
24%	$165,000 to $315,000
32%	$315,000 to $400,000
35%	$400,000 to $600,000
37%	$600,000 and up

 

[flintnational]

Max Lott Calculator Updated

The Max Lott Tax Calculator that someone posted in a prior thread has been updated with the conference bill released today.

 

[RunningBum]

full text:

Read the Republican tax bill for yourself: Full text of the Tax Cuts and Jobs Act

I'll see if I can find anything on Roth re-characterizations...

I was just going to post this link from the Washington Post, but I'm not sure if you need an account to see it, because I have an account.

http://apps.washingtonpost.com/g/documents/business/read-the-full-gop-tax-bill/2678/

I find this kind of thing hard to read because even though you can search for terms, you still have to understand the context and it's just hard to follow. It seems that they talk about the current law, House Bill, and the Senate Bill, and conference agreement, and it's not all that well formatted.

However, as best I can tell, and it seems pretty clear, both houses agreed that recharacterization of Roth conversions are no longer permitted in tax years after Dec 31, 2017, so that stands in the final bill. I certainly take that to mean you can recharacterize in 2018 for tax year 2017, but that's just my interpretation. It could be wrong, or it could be that your holding company won't have a mechanism for it after 1/1/2018 even though the law seems to allow it for the 2017 tax year. EDIT: Page 639 is where I see this.

There are references to other types of recharacterizations allowed. For example, if you contribute (not convert) to a Roth, you can later recharacterize that as a tIRA contribution. That's not what most of us are looking to do.

 

[JDARNELL]

Also looks like the majority of the education benefits stayed the same so not a lot of changes in this area.

 

[Another Reader]

If you itemize. you lose the benefit of the exemption. That's probably going to cost me some money, despite the more favorable tax rates. So is the $10,000 limit on state and local taxes.

It seems like the only way to pass any major legislation these days is to lock everyone in a room for a few days and force them to hammer out a compromise. Lots of unintended consequences with that approach.

 

[43210]

Another benefit of being an ER with kids. Tax credit LOL. Too bad its not a credit on everything I spend on them.

Don't you need earned income to get it (which was already the situation, but credit is expanded)?

 

[CaliKid]

I saw this on another site regarding the $10k limit on state and local taxes:

Page 88 of Tax Bill…

“(b) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable years beginning after December 31, 2016.”

 

[43210]

Forced FIFO not in final. SpecID stays.

 

[Amethyst]

A lousy $10,000??!

We're definitely moving to a red state, or at least a purple one.

 

[Helena]

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What happened to the over age 65 and/or blind extra standard deduction ??

The House version eliminated it. The Senate version retained it.

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[LOL!]

Check up on our favorite tax breaks for yourself:

http://docs.house.gov/billsthisweek/20171218/CRPT-115HRPT-466.pdf

 

[Helena]

Check up on our favorite tax breaks for yourself:

http://docs.house.gov/billsthisweek/20171218/CRPT-115HRPT-466.pdf

Thanks, but I can't access it form my mobile.

Any info about the over age 65 extra deduction at that link ??


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[RunningBum]

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What happened to the over age 65 and/or blind extra standard deduction ??

The House version eliminated it. The Senate version retained it.

.

Looks to me that they went with the Senate version and retained it. Page 537-538.

 

[LOL!]

The Senate did not change the deduction and the Senate version is what the conference agreed upon.

 

[Helena]

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Many thanks for the info


ETA:

Now I have found conflicting info.

That it did eliminate the over age 65 and/or blind extra standard deduction.

" Increases the standard deduction to $12,000 for single filers, $18,000 for heads of household, and $24,000 for joint filers, while eliminating the additional standard deduction and the personal exemption. Provisions sunset at the end of 2025.

https://taxfoundation.org/conference-report-tax-cuts-and-jobs-act/


If this is correct, single seniors who don't itemize have lost $250 right out of the gate.


.

 

[RunningBum]

The page numbers I'm using refer to the Washington Post version of the document, which shows over 1000 pages. LOL!'s link is a much more readable version and I think page numbers match what everyone else is referring to with the tax bill. Sorry about that.

 

[Helena]

Don't you need earned income to get it (which was already the situation, but credit is expanded)?

The way I understand it, Rubio was holding out to get more of a refundable amount. So at the last minute, they raised the refundable amount of the credit from $1100 to $1400.

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[HtownRose]

Yes thank you LOL! ~ your version works for me...mine just kept freezing up.

 

[Calico]

Thanks, but I can't access it form my mobile.

Any info about the over age 65 extra deduction at that link ??

The snip below is from the conference agreement. Based on this, it looks like the extra deduction is retained, as it was in the Senate bill, since it "follows the Senate amendment."

Edit to add: ooops, I see others already answered this question.

 

[zedd]

I get it that the latest tax proposal does away with the 15% bracket but I found no mention of the current favorable treatment of capital gains in the 10 and 15% brackets (ie zero percent tax rate on capital gains.) Is this going away?

For those not familiar with what I'm talking about, here's a reference (Note: I'm sure the reference to 2018 is erroneous but the rest is correct):
https://www.thebalance.com/how-to-use-the-zero-percent-tax-rate-on-capital-gains-2388995

 

[FIRE'd@51]

In addition to retaining the medical deduction, the final bill appears to reduce the threshold to 7.5% for all taxpayers for tax years 2017 and 2018 (page 63), afterwhich the threshold goes back to 10%. This provision is retroactive to the beginning of this year.