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I'm interested to see what people think about the Tax Reform and Jobs Act. How do you guys think it will effect us( younger) controllers?
Tax Reform and Jobs Act.
- Thread starter OrangeYOGAMat
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If you're in a state with high income tax and high property taxes you're double boned. So anyone in NY, CA, and NJ at least it is very very bad for you.
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The proposed act would lower taxes for those filing single making between $60,000-$170,000 from 25% to 24%. So it won't be a drastic change, but for most controllers that 1% tax cut would mean around an extra $1,000 bucks in their pocket at the end of the year.
It is a federal act which affects your federal income tax. Property taxes and state income taxes are set by the states and not the federal government. You'll get an equal benefit from it regardless of what state you live in
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You lose the property tax and state income tax deductions for your federal taxes in the Republican plan. I think the mortgage interest deduction is gone too, but that might just be the House plan, I can't remember. My property taxes are $12,000/yr and NY has a high state income tax. Losing those deductions on my federal taxes is huge. Have you even read the tax plan?
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No one's arguing politics. Someone asked a question about the effects of a new policy. Financial planning is part of our careers, and there's no reason not to talk about it here, especially if certain aspects effect our career specifically (hence my first post). People get sent all over the country for this job, and they may not know or understand how certain things will effect them. IF the the posts devolve into typical political drivel, they will be removed.
@DankVectorz I think the mortgage deduction goes away at very high levels of interest payments, but I haven't keep up with it much to be certain. Definitely worth finding out.
@DankVectorz I think the mortgage deduction goes away at very high levels of interest payments, but I haven't keep up with it much to be certain. Definitely worth finding out.
No, I didn't read the plan. I only looked at a chart outlining the changes and read some news articles outlining the major talking points.
I'll admit when I read your reply I thought you were suggesting that the bill affected how much you directly pay in property taxes. I didn't make the connection with the deductions because I rent my home and never had the benefit of the deductions to begin with. The good news for you though is I think the latest version doesn't eliminate the property tax deduction but rather caps it at $10,000. So if you pay $12,000 you would lose out on $2,000, but could recoup a good bit of that from the overall tax cut. Not having the income tax deduction could still result in an overall loss though.
I agree that this website isn't the place to discuss politics. I don't think the goal of the OP was to start a democrat vs republican debate though, but rather to understand something that is black and white yet written for lawyers. Hearing the perspective of a homeowner is helpful for me because it pointed out something I overlooked
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Just realized the previous posts were talking about property tax and I was talking about mortgage interest.
Here’s a summary of highlights of both the house and senate versions. Here's what's in the Senate tax bill
Here’s a summary of highlights of both the house and senate versions. Here's what's in the Senate tax bill
I made a spreadsheet and plugged-in my numbers. As a result of the doubling of the standard exemption - from the current $6,000 to the proposed $12,000 - the lowered tax brackets for my taxable income range - currently 10%, 15%, 25% and 28% versus the proposed 0%, 15% and 25% - and the increases in the tax bracket dollar increments, I will pay approximately $3,388 less per year in federal taxes. The increased standard deduction means I will no longer have to itemize. And going back through my last 15 years of tax returns, I only had one year where the itemized deductions were greater than $12,000 (related to medical expenses).
As someone that lived in SoCal, I can sympathize with those of you that live in high-tax states. That said, there will be some form of SALT deduction in the final bill. It will not be a full SALT deduction, but something is better than nothing... which was the original plan in both Houses. Not sure what it will be but there will be a deduction. However, I'm not sure how many will be able to itemize in the future as the standard deduction is increasing to $12k for single filers and $24k for married filers. If you're married, itemizing more than $24k may be difficult. In the end, and what almost no "pundit" talks about, Congress is trying to get fewer taxpayers to itemize so the IRS can spend their time auditing those businesses and individuals that do itemize.
As someone that lived in SoCal, I can sympathize with those of you that live in high-tax states. That said, there will be some form of SALT deduction in the final bill. It will not be a full SALT deduction, but something is better than nothing... which was the original plan in both Houses. Not sure what it will be but there will be a deduction. However, I'm not sure how many will be able to itemize in the future as the standard deduction is increasing to $12k for single filers and $24k for married filers. If you're married, itemizing more than $24k may be difficult. In the end, and what almost no "pundit" talks about, Congress is trying to get fewer taxpayers to itemize so the IRS can spend their time auditing those businesses and individuals that do itemize.
Now that the conference committee has completed their work, I plugged-in my new numbers. Filing single with no children, I will pay approximately $1,675 less per year in federal taxes. With the $12k standard deduction, and having moved to a state that does not charge income tax, I will no longer be itemizing.
If you're married or have children, the conference committee's bill increase the standard deduction to $24k and the child tax credit doubles from $1,000 to $2,000. The child tax credit is fully refundable up to $1,400 and phases out for those filing married at $400k in income.
For those that live in high-tax states, SALT deductions cannot exceed $10,000 combined. In other words, you can deduct all of your state and local taxes (income, sales and property) up to $10k.
For home owners, mortgage interest on homes purchased before 1 Jan 2018 will remain at purchase prices not to exceed $1m. Homes purchased after 31 Dec 2017, however, will be limited to mortgage interest deductions on homes valued at up to $750k.
Those are probably the major highlights for controllers, but let me know if you need to know something specific. I'll help you out if I can.
If you're married or have children, the conference committee's bill increase the standard deduction to $24k and the child tax credit doubles from $1,000 to $2,000. The child tax credit is fully refundable up to $1,400 and phases out for those filing married at $400k in income.
For those that live in high-tax states, SALT deductions cannot exceed $10,000 combined. In other words, you can deduct all of your state and local taxes (income, sales and property) up to $10k.
For home owners, mortgage interest on homes purchased before 1 Jan 2018 will remain at purchase prices not to exceed $1m. Homes purchased after 31 Dec 2017, however, will be limited to mortgage interest deductions on homes valued at up to $750k.
Those are probably the major highlights for controllers, but let me know if you need to know something specific. I'll help you out if I can.
breakaway2000
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Well, seeing as how I pay $12k in property tax and $20k in state income tax, that doesn't really help me much.
Stinger
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Ouch.
rugbydog11
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Taxes suck every year. I have a rental property, but I am selling it and closing before the end of the year (hopefully) and I moved states.
18.6k in federal paid
5.1k state (ky)
Roughly 1.5k in property taxes I think but will get that back if I close pre jan 1?
18.6k in federal paid
5.1k state (ky)
Roughly 1.5k in property taxes I think but will get that back if I close pre jan 1?
If you itemize, it does not matter when you sell as it relates to taxes paid. While there are just a handful of specific exemptions as to when you may deduct taxes, known as carryovers, itemized deductions should otherwise be taken in the year they were paid. If you paid property taxes in 2017 and you itemize, you can deduct them when you file 2017 taxes (in 201
without regard as to the date you sell your property.- Messages
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The big lie they’re telling is that the standard deduction will double. That is not really true.
Currently the standard for single is $6,300, but every person on your return also gets a $4,050 exemption. So a single person currently gets $10,350.
The standard deduction will change to $12,000, but the exemption is being lowered to $300 (no longer $4,050). So, the total deduction a single person will be able to get is $12,300.
That is only $2,000 more (not double)
Currently the standard for single is $6,300, but every person on your return also gets a $4,050 exemption. So a single person currently gets $10,350.
The standard deduction will change to $12,000, but the exemption is being lowered to $300 (no longer $4,050). So, the total deduction a single person will be able to get is $12,300.
That is only $2,000 more (not double)
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Love to use your spreadsheet!
Since I built the spreadsheet for my specific needs, it won't be good enough for most of you. However, this website will be great for most of you to compare your specific situations. It will also compare your tax bills to current law, the House proposal, the Senate proposal, and the final bill.
Tax Plan Calculator by Maxim Lott
