Does anyone know what the latest is on impact to rentals? I’m having a hard time keeping up.
The way the bill started out, it was expected that most W-2 workers would fill out a tax form that was about 1/2 a page. Everyone takes the standard deduction, no need to keep track of all the items on the current Sch A. Of course if the senate version goes through we are back to many homeowners not taking the standard deduction and filling out the equivalent of the current 1040 with schedules.
But it is marketing to say ‘easier’ or ‘simpler.’ New, improved, better, friendlier? Take your pick.
How about “different”?
What does “eliminating every deduction” mean? To have an income tax, you have to have a definition of income. That means you have to define what is in, and what is out. Another word for “what is out” is “deduction.” You can’t eliminate deductions, because you have to establish a line.
But let’s look more closely here. Suppose, like some in this thread, I have a rental unit. I pay mortgage and upkeep for my rental unit, and I take in rent. Are you possibly suggesting that I am taxed at X% of the rental income?
What if I run a grocery store. I buy groceries from wholesalers, and I sell them. I pay for my building, I pay for my store employees, I collect sales tax and give it to my state. Are you suggesting that I am taxed on my gross income?
I don’t particularly care about simplification. As long as tax software can keep up, it doesn’t matter much to me. No one has to do it by hand any more unless they like to torture themselves.
And the regressive nature of the flat tax is just cruel. Should a Wall Street trader pay the same tax amount out of a dollar as a hotel maid? I don’t agree with that. Someone who barely makes enough to put food on the table and a roof over their head, never mind any money for health care or transportation shouldn’t pay the same % of tax. That is always the argument that kills the flat tax. Which isn’t our topic here anyway, since it is not in either version of the tax bill. So I won’t comment on it any more.
Sorry, I was unclear. I was only thinking of individual income tax, such as W2 earnings or 1099, and not about those who run a business which has associated expenses (your example of a rental unit).
Many people with 1099 incomes are self employed.
So you’re not talking about eliminating every deduction, but instead you’re talking about eliminating a few deductions but keeping all the rest. If you do that, you invite tax avoidance, as people move their income from the area where you eliminated deductions to the area where you kept them. That’s not a simplification; it’s a complification. If I have to do something I wouldn’t otherwise do, to shelter my income by moving it to the area where I get deductions, you’ve made my life more complicated for no good reason.
@twoinanddone : definitely not “friendlier” if you’re the one getting screwed.
You can have an untaxed allowance with a flat tax, such that the hotel maid ends up paying very little tax.
I am in no way in favor of this plan, for numerous reasons, but for us, yes, it will be simpler. We would take the $24,000 standard deduction rather than itemize. But that is a tiny simplification vs all of the horror in this legislation.
You and your husband currently each get about $6000 in standard deduction plus $4000 in personal exemption. So for both of you…that’s roughly $20,000.
In the new plan, you will only get a $24,000 standard deduction.
Are you saying that this $4000 difference will improve your taxes owed significantly?
Sure this will make taxes simpler. Taxes aren’t difficult when you live in poverty 
@thumper1, I think rockvillemom was just saying that now they won’t itemize, so it will be simpler. She didn’t say anything about whether it would be better or worse as far as taxes owed.
@thumper1 - we itemize and it usually comes out to $23,000 in itemizations plus the 2 exemptions. So, trading that for a $24,000 standard deduction seemed worse. But when I run the available online calculators, our projected tax bill is about $1000 less. Higher taxable income, but lower brackets. So, it appears to me that for myself and DH, it will be simpler and we would save, at least initially.
But, I in no way support this legislation. The imact on the deficit is absurd, fear of cuts to Medicare and so forth as a result, etc.
I think our family is in the same boat as you are.
But any tax savings we have likely will go towards helping both of our kids who are getting slammed with this tax reform. One is self employed and will likely see a $3000 increase in taxes…and he isn’t high income to begin with.
The other is a professional school student with a tuition remission…and if she ends up paying taxes on $25:000, I have no idea where that $6000 or so will come from…well…yes I do…but my $1000 in tax savings isn’t going to cover it.
Isn’t it $16,000? 2x6000+4000? Making the difference $8,000. That’s good money in my book.
Of course eliminating deductions make it simple. What’s there even to argue about? For most people, income comes in mail, late January, W-2, 1099s. All you have to do is collect the mail in late January early February. Entering those numbers is a breeze. Deduction is where things get messy since you have to go around looking for the year’s paperwork. Is that a crime if you agree there are one or two good things in the new tax plan? I wouldn’t need to buy tax software if I don’t deduct.
The tuition waiver tax is gone in the Senate bill.
Except tuition and medical deduction, I like the House version better. I think they should keep mortgage deduction to $500K not $1M and they should keep lifetime gift limit to $5.5M as in House version.
I think what bothers me the most (at the moment, at least) is the favorable treatment of private school tuition versus the elimination of a big part (or maybe all, if the House has its way) of the deduction for property taxes, which is what pays for PUBLIC schools in our state. If there’s a better example of who this bill is favoring, I don’t know what it is.