New tax proposals

[dietz199]

Because they are not at this point providing a benefit to anyone. They might in the future, but they aren’t now. They are still a risk.

The evil landlords provide housing. Support the construction industry, the mortgage industry, the moving industry, etc.

You can only cut taxes to those who already pay. Since the tuition waiver has stayed a typical grad student (who is assumed lower income) will benefit from this plan

Carry on…

[sherpa]

@“Cardinal Fang” - I haven’t read the bill, but my understanding is that small landlords and small LLCs (with few or no employees) aren’t getting any new pass through benefits, which are reserved for the big money players.

Still, shed no tears for small time landlords or small business owners; the tax code has been biased toward us for years.

[notrichenough]

From page 560 of the bill, which largely adopts the Senate version on this issue:

The conference agreement reduces the threshold amount above which both the limitation on specified service businesses and the wage limit are phased in. Under the conference agreement, the threshold amount is $157,500 (twice that amount or $315,000 in the case of a joint return), indexed. The conferees expect that the reduced threshold amount will serve to deter high-income taxpayers from attempting to convert wages or other compensation for personal services to income eligible for the 20-percent deduction under the provision.

The conference agreement provides that the range over which the phase-in of these limitations applies is $50,000 ($100,000 in the case of a joint return).

How much do associates typically make at a big law firm? If they are single, the 20% deduction starts to phase out at $157,500 and is gone at $207,500.

ETA: assuming I am interpreting all this correctly, which is no sure thing. @-)

[BunsenBurner]

At really, really big law firms, first years make $180k. It goes up form there. Plus bonuses.

[Cardinal_Fang]

Good catch, notrichenough.

[greenwitch]

The corporate AMT is gone. Too bad.

The individual AMT remains, for individuals making $500,000, couples making $1,000,000.

[BunsenBurner]

Corporate AMT is gone - good for tech cos.

Marriage penalty remains - bad.

[notrichenough]

Yes the marriage penalty remains, but only when your joint income exceeds $400,000.

Currently the penalty starts at $153K or so.

[notrichenough]

Lawmakers slipped a little Christmas present into the conference bill, that gives an extra tax cut to owners of large real estate holdings through LLCs

I haven’t been able to find this in the bill yet. Anyone know which specific section addresses this?

[BunsenBurner]

Mr. and I joked that if we formally divorced when we paid for college, he could have got full deduction for the mortgage, and I would have claimed all college related credits. Dumb married people! The parents of one of kiddo’s roomies actually did this.

[Dave_N]

okay, I’m reading this fine bill. On pdf page 604, foot numbered 81, it says the SALT provisions are

The conference agreement also provides that, in the case of an amount paid in a taxable
year beginning before January 1, 2018, with respect to a State or local income tax imposed for a
taxable year beginning after December 31, 2017, the payment shall be treated as paid on the last
day of the taxable year for which such tax is so imposed for purposes of applying the provision
limiting the dollar amount of the deduction. Thus, under the provision, an individual may not
claim an itemized deduction in 2017 on a pre-payment of income tax for a future taxable year in
order to avoid the dollar limitation applicable for taxable years beginning after 2017.
Effective date.−The provision is effective for taxable years beginning after December 31,
2016.

I think I understand what they are trying to say. You can’t prepay to get a property tax deduction.

But did they accidentally remove the deductibility of SALT for this year?

[BunsenBurner]

“The provision” means that it only applies to the provision of prepayment, IMO.

[Madison85]

I read it to mean that in 2017 you can pre-pay (and deduct) up to $10k of 2018 state income tax.

[Cardinal_Fang]

You can deduct $10k of your 2018 SALT taxes anyway, even if you pay in April of 2019. Why would you want to pay them over a year earlier?

[Madison85]

1)To get 2017 taxable income down to the 15% bracket so that qualified dividends and capital gains are taxed at 0%

2. In 2018 with MFJ, you wouldn’t get the full tax benefit of paying $10k of state income and property taxes unless you have at least $24k of other itemized deductions.

[Dave_N]

I think it comes down to a definition of what the “provision” is. Following the general style of the document, the provision generally seems to refer to the whole section, not just the current clause/section/paragraph. I think the “provision” refers to the whole section 2 which starts pdf 601/footer 78.

Again, I don’t think they meant to do this, but that’s how I read it

I don’t understand all of this, it is just noticeable to my unfrozen-caveman pattern-matching brain.

[Dave_N]

Wow, I’m not a good lawyer. I read it as trying to address the following situation. If I owe 15K in property taxes every year, I pay and deduct 15K every year. Now I see what is coming for 2018, so I send my 2018 property tax collector an extra 5K on dec 31, 2017. So I would have been able to deduct 20K of property taxes in 2017. The balance of 10K I pay in 2018. I read this clause as what they were trying to prevent.

But, the effective date seems to apply to the whole section. I do not see a different effective date. But there are many dates in those 5 pages, so I am likely confused.

[bclintonk]

@saillakeerie

@bclintonk I think you are still living at least 10-15 years in the past (particularly with repeated references to the “evening news” and newspapers)

Say what you will, but an awful lot of people still get news from prime-time news broadcasts and prime-time cable news, as well as from newspapers. According to AdWeek, for the week of Dec. 4, 2017, average daily viewership for the 3 major broadcast networks’ “evening news” broadcasts was a little north of 25 million. PBS NewsHour adds another 1.1 million or so. For Fox News, MSNBC, and CNN the combined total was just over 5 million, though this is overstated a bit because it adds the viewers for various news programs (e.g., Hannity + Tucker Carlson on Fox News, Rachel Maddow + Lawrence O’Donnell on MSNBC) and so it undoubtedly double-counts some viewers who watch multiple cable news shows; Hannity usually has the top-rated cable news show with around 700,000 viewers, a small fraction of the broadcast networks.

Average daily circulation of some major newspapers: Wall Street Journal 2.4 million, New York Times 1.9 million, .USA Today 1.7 million, LA Times 650K, San Jose Mercury 500K, NY Daily News 500K, NY Post 500K, Washington Post 500K, Chicago Sun-Times 500K, Denver Post 400K, Chicago Tribune 400K, Dallas Morning News 400K. Total daily paid newspaper circulation is around 35 million—well below its 1980s peak of 65 million, to be sure, but that’s still an awful lot of people getting news from conventional newspapers. And remember, in many cases there are multiple readers per household.

I’m perfectly well aware that many people now get most or all of their news from internet sources whether through active searches, news feeds, or second-hand through Facebook, Twitter and the like. But the vast majority of that information is coming from conventional news sources like CNN, the New York Times, etc. There are certainly others—HuffingtonPost, Politico, Breitbart—but conventional broadcast news, cable news, and print media dominate the flow of news over the internet. And just as with conventional media, the volume of that information, and the numbers of people paying attention to it, is much diminished on the weekends. Which is why every politician in the country, including the most tech-savvy, will still tell you that if you want to bury bad news, the best time to release it is late on a Friday, because that’s when it will get the least attention.

[calmom]

@Dave_N - the provision that you quoted at post #2350 refers to state income taxes, not property taxes:

" with respect to a State or local income tax imposed for a taxable year beginning after December 31, 2017"

It is saying that taxpayers can’t pre-pay taxes on their 2018 income in 2017 in order to maximize deductions.

I pay estimated taxes, both state and federal, and I just paid my final installment for state tax 2017 today, even though it is not “due” until mid-January. So my 2017 income taxes for California are now 100% paid up. That’s acceptable, and from the excerpt you quoted it still will be acceptable under the new law. So when I itemize on my 2017 return, I’ll be able to include that.

But the provision you quoted seem to be saying that I can’t get away with pre-paying my 2018 state income tax in 2017, in order to take a deduction in 2017 that would not be available if the same amount were paid in 2018.

Here it the key quote:

Thus, under the provision, an individual may not
claim an itemized deduction in 2017 on a pre-payment of income tax for a future taxable year in
order to avoid the dollar limitation applicable for taxable years beginning after 2017.

[swimcatsmom]

Anyone know what happened with the lifetime learning credit?