That looks like it's the undo being axed. No mention of conversion options changing otherwise.
Yeah, I think I am confusing "conversion" with "re-characterization." I hope you are correct.
That looks like it's the undo being axed. No mention of conversion options changing otherwise.
According to the long section I quoted above it looks like it's half of the
MFJ limits that I posted above.
So for singles:
0% up to $38,600
15% up to $239,500
20% above that
A reminder - this is just a bill. It still needs to
- be passed by majority vote in the House
- another tax bill needs to be written, then passed in the Senate
- the two bills need to be reconciled
- both chambers need to pass the new reconciled bill
- then it needs to be signed by POTUS.
Lots of things will change during that process - if it makes it that far.
REPEAL OF MEDICAL EXPENSE DEDUCTION
TERMINATION OF DEDUCTION AND EXCLUSIONS FOR CONTRIBUTIONS TO MEDICAL SAVINGS
ACCOUNTS.
But it creates a reference point, and a reference for possible changes.A reminder - this is just a bill. It still needs to
- be passed by majority vote in the House
- another tax bill needs to be written, then passed in the Senate
- the two bills need to be reconciled
- both chambers need to pass the new reconciled bill
- then it needs to be signed by POTUS.
Lots of things will change during that process - if it makes it that far.
Nooo, they want to take away the Roth conversion horserace! And worse, the over-conversion, and correcting it back to the exact amount you want come tax time. We'll have to be conservative with the conversion early in the year, and top it off after end of the year distributions come in December, which is what I used to do until I learned of the better way here.Considering the statement below, it appears that the backdoor Roth IRA may be gone as well, again, assuming I am reading this correctly.
Sec. 1501. Repeal of special rule permitting recharacterization of Roth IRA
contributions as traditional IRA contributions.
Current law: Under current law, an individual may re-characterize a contribution to a
traditional IRA as a contribution to a Roth IRA (and vice versa). An individual may also recharacterize
a conversion of a traditional IRA to a Roth IRA. The deadline for recharacterization
generally is October 15 of the year following the conversion. When a recharacterization
occurs, the individual is treated for tax purposes as not having made the
conversion. The recharacterization must include any net earnings related to the conversion.
Provision: Under the provision, the rule allowing recharacterization of IRA contributions and conversions would be repealed. The provision would be effective for tax years beginning after 2017.
Consideration: This provision would prevent a taxpayer from gaming the system by, for example, contributing or converting to a Roth IRA, investing aggressively and benefiting from any gains (which are never subject to tax), and then retroactively reversing the conversion if the taxpayer suffers a loss so as to avoid taxes on some or all of the converted amount.
The estate tax provisions also contain wrinkles. The estate-tax exemption, set for $5.6 million per person and $11.2 million per married couple, would double immediately. The tax would get repealed starting in 2024.
Even after repeal, heirs would continue to get something known as a “step-up in basis.” That means they would only owe capital-gains taxes on the difference between the sales price of an asset they inherit and the value of the asset at the previous owner’s death. Previous versions of estate-tax repeal had limited that benefit.
Nooo, they want to take away the Roth conversion horserace!
I'm fine too, but it's the fine tuning that I don't like to lose. In the old days, I was just trying to keep everything under the 15% bracket, so that I didn't push any QDivs into being taxed. $100 over? OK, that cost me $30 in taxes, $15 more than I wanted, no biggie. Next year, $100 over? Big hurt, it would cost me over $8000 in subsidies. People like me who are controlling Roth conversions and LTCGs are going to have to be very careful. The mechanics will be different, and harder, than just doing your taxes after the end of the year, and then subtracting out conversions until you get exactly where you want.Heh. This year is my first year using the horserace (and it's looking excellent so far). Maybe my last use of it.
It is clearly gaming the system, so philosophically I'm fine with it going away.
Gift Tax Exemptions:
Not clear yet - there is a section that spells out a bunch and a rate table, but it is completely unclear what thresholds apply to the gift tax.
The only thing clear is that no changes are made until 2024.
After Dec 31, 2023 (so starting Dec 2024)
Hmmm - that's not too clear is it.
Nooo, they want to take away the Roth conversion horserace! And worse, the over-conversion, and correcting it back to the exact amount you want come tax time. We'll have to be conservative with the conversion early in the year, and top it off after end of the year distributions come in December, which is what I used to do until I learned of the better way here.
If it sticks.
Provision: Under the provision, the rule allowing recharacterization of IRA contributions and conversions would be repealed. The provision would be effective for tax years beginning after 2017.
I tried out that Roth conversion, recharacterization gaming the system thing a number of years ago. I set up two Roth conversions and made what I thought were very opposite investments in them with the plan that I would recharacterize the loser and keep the winner.
They both ended up losing.
Ouch! My problem this year is, my winner is running well and winning big, but I'm going to have to cut it back considerably to stay under 400% FPL.I tried out that Roth conversion, recharacterization gaming the system thing a number of years ago. I set up two Roth conversions and made what I thought were very opposite investments in them with the plan that I would recharacterize the loser and keep the winner.
They both ended up losing.
Since it talks about the "tax years", a recharacterization in 2018 for a 2017 conversion would apply to the 2017 tax year so it would be allowed. That's my interpretation, but it seems pretty clear to me.I am concerned about this part:
Provision: Under the provision, the rule allowing recharacterization of IRA contributions and conversions would be repealed. The provision would be effective for tax years beginning after 2017.
I had planned to do a conversion this month or next and then recharacterize some small amount next year once I have final income numbers. However, the recharacterization would take place in calendar year 2018, so I'm not at all clear on whether or not I'll be able to do it. I guess it's just wait and see if they get this passed in 2017 and if not, hope somebody remembers to change 2018 to 2019 in this provision before they take it up again next year.
OK - can't ferret out the details yet on medical expense deduction.
IN general the language is:
and
But then they go into great detail to spell out medical expenses and spell out $ limits for certain types of expenses, etc.
And language under the Medical Savings Accounts goes into great detail about employer versus employee contributions.
So it's indecipherable to me as yet.
Did some preliminary math and it is not looking good. A lot of unknowns but removing personal exemptions (I have kids) is going to be very bad.
I am looking at 70% increase in federal income tax.
[mod edit]
A reminder - this is just a bill. It still needs to
- be passed by majority vote in the House
- another tax bill needs to be written, then passed in the Senate
- the two bills need to be reconciled
- both chambers need to pass the new reconciled bill
- then it needs to be signed by POTUS.
Lots of things will change during that process - if it makes it that far.
Did you figure in the child tax credit of 1600 per child. If you look at it depending on your bracket it is actually worth more than the exemption. (Where does it phase out is the question) At 35% for example 1600 credit is the equivalent of $4500 in an exemption.