I can only chuckle when I read the reporting on the plan. The times reproduces a republican example for a family of four with income of 59,000 where federal income tax will fall from $1563 to $400. NYT calls this “2% of their income” . I suspect voters will call it a tax cut of over 60%. Good luck in the 2018 midterms for those in working class districts who vote no.
Who knew that buying votes could become bi-partisan ;).
@MinnesotaDadof3 That’s an excellent link, most complete so far. Good to know estate tax repeal will be depaked until 2024. Hoping it will be permanently delayed. Step up will remain.
“And step-up in basis at death would remain, even after estate tax repeal.”
One positive for people who have rental real estate, it looks like they will allow for pass through from that activity, taxed at a maximum of 25%, as long as you’re not an active participant. It’s weird to think you should limit your hours working on your properties, so you don’t get taxed at a greater rate. At least that’s how I read it.
BD, the way I read it the income portion from capital investment is taxed at 25% while earned income from your own work is taxed at ordinary rate. I am guessing the reasoning behind is passive participants create jobs for others who will then pay tax on their earnings. If you are an active landlord, you don’t create jobs. You just make money for yourself and taxed at the ordinary rate.
I think to be an active landlord, you have to work over 500 hours a year in that business? That’s a lot of hours…I doubt many people would claim they’re active. But maybe I misunderstood it.
That is an aspect of increasing the privilege of capital income over labor income. Is that a surprise?
BD I have no idea, never been a landlord. 500 hours is about sixty 8-hour day, about 12 week. That does sound a lot Anyway, it means most landlords will get a break.
Not to be insensitive, what drives medical expenses? If you have an insurance, doesn’t it cover pretty much everything? Is it medications?
I’m surprised they reduced the rate at all, I didn’t realize how many things they were going to touch. Must be a lot of members of Congress with rental real estate.
No idea. Whether I agree or not, I have to admit it’s quite logical. You can gripe that capital makes money and taxed lower or you can applaud lower tax on capital claiming it creates jobs.
You would have to have a large number of properties, or ones you are completely remodeling to get to 500 hours a year. We do almost everything for our four rentals and would never have come close, even after all the cleaning/fixing after people destroyed them.
Our taxes are going up. Way to stick it to the blue states.
My to do list if this passes:
Pay my property taxes through June 2018 in December and deduct in 2017.
Make an estimated state income tax payment in December and deduct in 2017.
Take the next 5-7 years worth of donations and open a Fidelity Charitable giving fund and deduct in 2017.
Payoff mortgage in January because I won’t be able to itemize anymore.
Figure out how to cash in on some of this yummy pass-thru gravy - maybe write some software that can take in college confidential chance me posts and spit out their actual chances, LOL!
Can you pay your property taxes the year prior and have it count for tax purposes? Good idea.
If you pay AMT, you weren’t deducting property tax. It gets added up in calculating AMT. The very rich and the less fortunates are the only ones esaping AMT these days. It starts hitting at $130K until your income is so high and pay a lot of taxes at 39.6% rate that overwhelms “puny” AMT rate. I think that’s around $8-900K roughly speaking. Everyone between $130K and $900K are paying AMT and gets no deduction on property or local taxes.
“I can only chuckle when I read the reporting on the plan. The times reproduces a republican example for a family of four with income of 59,000 where federal income tax will fall from $1563 to $400. NYT calls this “2% of their income” . I suspect voters will call it a tax cut of over 60%. Good luck in the 2018 midterms for those in working class districts who vote no.”
@dadx, can you please post the article in the Times you are citing. I believe I read all the articles and opinion pieces on this subject in the Times since the “plan” was announced by the President, and cannot recall your example being used anywhere.
TYIA
Bus - I believe we can’t pay our 2018 property tax this year because the property tax bill gets posted in February.
“Not to be insensitive, what drives medical expenses? If you have an insurance, doesn’t it cover pretty much everything? Is it medications?”
Our medical expenses are a mixture of premiums, deductibles, and medications. Our premiums are several thousand dollars between us. My husband has medicare, supplemental medicare, medicare D. Most of his medical bills as far as doctors are covered between those insurances thankfully. He has very high prescription costs. Medicare D leaves you a lot to pay out of pocket once you hit the donut hole which he does rapidly. For instance, when he was being treated for cancer at M D Anderson they found a blood clot in his lung even though he was already on bloodthinner. . The doctor called and asked us to come in. While we were waiting to see him the pharmacy called on my cell phone to make sure we knew our share of the medication he had prescribed (that we didn’t know about yet) was going to be $2100 for one month. The next month it was over $3k. Once we got to the other side of the donut hole it was a little under $400 a month. Some medications are not covered. I had to flush his picc lines every day with heparin. $60 a month for 60 syringes that medicare did not cover. And he is on a lot of meds. (he is on a cheaper bloodthinner now but if he has to have a procedure he has to transition to the expensive one for a few days - the expensive one is out of your system in 12 hours while the others can take days - he can’t be off blood thinner for days - last time he went of for three days he threw a blood clot and ended up back on the expensive stuff for 4 months. (he has a thing called antiphospholipid syndrome).
I have a high deductible plan . Costs me several thousand and covers nothing till I am $3000 out of pocket.
My understanding is that you deduct in the year paid. Of course your town must be in a position to accept it. For me I can pay the February and May quarterly bills late in December once the February bill which also show the May amount is issued. .
Good point, though we are fortunately make enough to be beyond AMT and pay that 39.6% I suspect many people may still be caught in AMT for 2017. We paid AMT for many years because the Bush tax cut hopelessly put us there. However when that tax cut ended, we were back in the normal tax regime.
Meds, medical equipment, high dental costs that aren’t covered, etc. My OOP max butts up very closely to 10% of my income so covered medical costs don’t go over that 10%. But it won’t cover things like my mobility aids, etc.
My meds cost a few hundred dollars every 90 days. Individually, they’re cheap but I’m on something like 14 meds and a handful of them are not covered by insurance because they’re available OTC- vitamins, omeprazole, etc.
Dental costs are the big killer for me though. I have always had weak teeth but when I got Sjogren’s (autoimmune disease that attacks your mouth & eyes), the dental problems went into hyperdrive.
http://www.chronicle.com/article/Republican-Tax-Proposal-Gets/241662
“The plan would also tax the tuition waivers that many graduate students receive when they work as teaching assistants or researchers.”
Twitter comments: People making ~$20k would be taxed on ~$40k at publics and ~$55k at privates.
" Everyone between $130K and $900K are paying AMT and gets no deduction on property or local taxes."
This blanket statement is absolutely not true.