Maybe we can have a contest to see who on these forums will be the first to receive the supposed $4000 increase? I am certainly not holding my breath.
I am with @3puppies . The loss of the personal exemptions is going to hurt us. Not huge as we started using the standard deduction a few years ago as our mortgage interest began to lessen. You reach a point when the deductions become less than the standard. We basically lose $16,000 in personal exemptions and gain $12,000 is standard deduction. So a $4,000 Taxable income increase. Not exactly the massive, massive tax cut our president promised. Nor a very good Christmas present.
In the states that operate their own ACA exchanges, enrollment is still open and is going gangbusters. In Washington state, already a record number of people have signed up, and enrollment still lasts another month.
For about 50% of Americans, ACA enrollment is still going on. Notably, you can still sign up if you live in a county affected by this year’s hurricanes or Maine’s windstorms.
Because of the way the President’s stopping paying CSRs interacts with the loss of the individual mandate, next year even more people who are subsidized will be able to get free insurance. Premium increases will be bad for those of us buying without subsidies, but people with subsidies get tremendous deals this year and will get better ones next year.
I guess what bothers me the most is it is like a set up on the Democrats. If the GDP economy does not pay for these cuts, then what? Do the Dems have to then raise taxes and once again be labeled as the tax and spend party? The GOP is like the drunken cousin you need to pick up after all the time. They cut taxes and dry up funds, then the level headed Dems try to bring in adequate funds and get railed for it.
To just raid the treasury for another 1.5 trillion is shameful.
Question: Does it make sense for college-age children to become independent for tax purposes, if parents no longer benefit from a tax deduction?
Can’t see how or why if the student is not really working.
Once you get out of the 10% bracket, the rates are anywhere from 2% to 9% lower than the current rates.
If your taxable income was $150K, for example, and now goes $154K, you will pay $3200 less in tax next year.
That’s not a bad Christmas present.
@notrichenough That would be cool. I admit I have not seen the new brackets yet. Stuff changes daily.
If your taxable income is $150K, you are in the top 10% of filers. What about incomes that are more representative of ordinary Americans?
@hebegebe - as I understand it, whether or not a college-age child is independent or dependent is not a choice - it is based on (or based off of?) how much support the child receives from the parents.
If the parents are providing 51% of the child’s support, they claim the child as dependent.
If they do not, the child is not a dependent.
If the child is not a dependent, they presumably would have to show how they are supporting themselves.
Good thing I drink water otherwise I would have been buying new monitors at work.
Obviously, the main winners are businesses and their shareholders, who are disproportionately in the top 1%.
It is possible that some others may get $4,000 worth of crumbs, though:
- Those who have significant stock investments or otherwise favored investments whose gains would be greater.
- Those who depend on a wobbly defined benefit pension plan that becomes less wobbly due to greater gains on its stock holdings.
Of course, it is hard to tell how much different the stock price changes in the future are compared to the scenario of no tax change, so it is hard to know exactly how much one’s specific stock holdings or interests benefit. Note that some companies and industries will benefit significant more than others.
My understanding is that the taxpayer can elect to claim a dependent, but is not required to do so.
To answer @hebegebe’s question, it can depend on the health insurance situation of the adult child. If the parents buy their own health insurance, they should consider carefully whether to have the child as a tax dependent. It’s complicated.
Having the child as a tax dependent raises the ACA subsidy limit for the family. In some cases, having the child as a dependent will push the family under the subsidy limit, saving tens of thousands of dollars for the family’s health insurance. If the family is already under the subsidy limit without the adult child, it will make their premiums cheaper… but it might push down below the subsidized insurance limit, putting them in Medicaid territory. If the family doesn’t live in an expansion state, that would be a disaster because they’d no longer be able to get subsidized insurance but wouldn’t be eligible for Medicaid.
On the other hand, if the parent is buying insurance for the adult child out of their own pocket AND the parents are well above the subsidy limit AND the child lives in an expansion state , then it would be cheaper for the child to become financially independent and get Medicaid.
Serious question, if someone here supports this bill, are they not troubled by the Speaker changing his story less 24 hrs after passage of the bill? He has already moved to the “Nobody knows if this bill will pay for itself?”
Are you saying that the correct thing for an economist to do for a 16 year forecast is to put in zero wars and no economic downturns of any type, then be surprised when they happen? Not buying it.
$150K is probably fairly representative of posters on this thread, since most of us are in our late 40’s- early 50’s or even older, and thus well into the peak earning years of our careers.
But fine. Assuming you were claiming 4 exemptions and not itemizing, your taxable income goes up by about $4k:
$75K to $79K: $1058 less tax paid next year, about 10% less.
$50K to $54K: $468 less tax paid next year, about 7% less
To me it is the repatriation give-a-way. what a bonanza. I wish I could pay a low 5% tax rate to bring my 401K money.
So the median taxpayer gets $500 and Apple gets $48 billion.
People do not seem to understand that companies do not want to pay any tax. It is a race to the bottom. They will still use shell companies to shield worldwide income. They will not bring it back to the USA when they honestly do need it overseas for expansion overseas. 20% is still too high.
What would you prefer they do?