As D1 just said about the upcoming W-4 debacle, “Yikes!”
This could reduce the popularity of the bill even farther. From “filing on a postcard” to everyone having to fill out new forms. Hurrah!
What W4 debacle??
Our town hall sent a news blast out to property owners clarifying that our second property tax payment can be made before December 31…and they even included the hours the tax collector will be around. I’ll be paying…tomorrow.
Well,in case anyone is interested, I make out like a bandit because I am a self-employed freelancer. So going forward that’s a 20% deduction on all of my earnings.
I lose about $1000 (in deductions) with the loss of the $4K personal exemption – before I itemized for about $9000, so with the personal exemption that was around $13K… so I won’t have enough to itemize going forward.
But my net income from self-employment is around ~$50K or so-- so the math works out actually reduce my tax rate to less than 10% rather than the 15% marginal rate I was paying before.
However, given that my numbers are so small, this still only reduces my taxes about about $1200 or so overall. Won’t change the picture in any way for self-employment tax, which is the biggest chunk of my federal tax liability each year.
And no, I’m not happy.
I have kids, I care about my kids, and their futures. They are going to be the ones to pay for this long term.
Good thing they allowed an entire two holiday weeks to get it done. What could go wrong?
@thumper1 - see my post #2819 - every employee will need to complete a new W4 form to determine 2018 tax withholding. The existing form is based on how many exemptions you take. Exemptions no longer exist. How do employers, payroll compsnies, etc. figure how much to withhold? A new form will have to be created and everyone who has W2 income will need to complete.
In our MD county, property taxes are paid in September and December. County is scrambling to see how to allow people to prepay in 2017. Even talk of allowing people to pay in January 2018 and make it retroactive to 2017 as the county council is on recess and cannot resolve this issue by year-end. Could this get any more chaotic?
I am already off work for vacation this afternoon. No W4 for me this year. I will fill it next year.
The worst case can happen is my January check will be over or under withheld. That will not kill me. The best action for payroll people is no withholding.
Social security has wide support because what you eventually receive is supposed to be proportional to what you contribute during your earning years. That is not fully true of course, as retirees with high income get considerably less relative to their contributions, but it is close enough to maintain this support.
The further you veer from payouts being proportional to contributions, the more social security will approach welfare, and the less support it will have.
The progressive tax system we currently have is already wealth redistribution from wealthy to less wealthy. The new one is also wealth redistribution, but with a lighter touch. At no point are we redistributing wealth from less wealthy to more wealthy.
Oh brother. New W4 forms. That will be so easy peasy for my freelancer who has several part time jobs. NOT. And especially not now…as they are school based jobs…and guess what…school is out.
Luckily DH and DD only have one W4 form each.
I won’t have any. Good. But I think I’ll need to redo for my pension.
But I don’t think anyone needs to worry about this yet…I seriously doubt this is even going to be available before January.
Not sure if this has been posted (fast thread)
Gee… maybe it’s not a good idea to push things through without reading them.
@calmom, your itemized deduction was less than standard deduction (the head of household ($9300) or married filing jointly/qualifying widow(er) ($12600) per 2016 tax form ), you should have chosen to use standard deduction. The new tax law that just passed, not only the standard deduction is nearly doubled, the child credit is doubled. If you have 2 kids you pay 0 dollars, if you have more than 2kids, the government pay your money to raise kid…
@BunsenBurner One thing that appears to take more people out of (the new) AMT is the $10k limit on SALT for regular tax purposes…it actually feels like MORE people will be in the equivalent of the old AMT, though in a sly way, by doing away with much of the SALT deduction.
Kiddie tax changes: unearned income taxed at trust rates…interesting. The top trust marginal rate of 37% for income over $12501 can be higher than the parents’ marginal rate! For MFJ, 37% doesn’t kick in until over $600k.
The filing on a postcard scares me - identity theft, anyone?
I prepaid part of my taxes before I filed the FAFSA, totally unrelated to the tax debacle. H has a call in to our accountant to see what we should do as we are in NY and our combined taxes on both homes we own is over $20K.
I told H that if he refuses to sell our big house and move to the small one, with lower taxes, that when he turns 65 and goes on Medicare, I will be divorcing him and seeking my share of the value of the big house. He can then keep it if he wants to. He will be inheriting his mom’s house and can sell that one to pay me off. He can finish paying the mortgage and get less than 2/3 of a deduction for the taxes. I will move to the paid off house with lower taxes; his half of its value will be deducted from what he would owe me on the big house. He thinks I am joking but I see my retirement dreams dissolving in high NY taxes. My friends think I am being mean but I grew up dirt poor in the projects and I don’t intend to grow old that way.
More on the kiddie tax: it is ‘simplification’ because the tax rates on a child’s unearned income are the trust tax rates thus you no longer need to combine the unearned income of siblings and you don’t need to know the parents’ marginal rate.
In case anyone cares (people with kids who have taxable scholarships) you reach the top marginal trust tax rate of 37% at only $12501!
The tax liability can be very difficult to pay when it’s for a full ride EFC 0 student at a pricey private school. Though, it looks like a dependent would get the full $12000 ‘Single’ filing status standard deduction (still looking for information to the contrary).
The worst case can happen is my January check will be over or under withheld.
They won’t even have a form ready to go in early January is my guess. Then companies need to get it and figure out how to distribute it to all employees, collect, and process them. This is going to be fun. Whee! @techmom99, divorce is expensive, too. 
So then the Paygo cuts to Medicare are pushed to 2019. Wow… what cowards!!!
But doesn’t the student have a higher standard deduction now too? So less of the taxable scholarship would actually be subject to the kiddie tax?
@mommdc I did edit to add that to my post, but now I don’t think that comes into play since it’s unearned income over $2100 that is taxed (not unearned income over the standard deduction) at trust rates.
Thus this change is a tax increase except if the parent already was in the top bracket (approximately $300k+ or $500k+ or $600k plus parent taxable income).