@mommdc You quoted the part that tells them how to deal with an employee who doesn’t provide a W4 – they default to single/zero. So a W4 is not required. And regardless, you can, and people do in fact, have flat amounts withheld from their checks for Federal withholding purposes.
Here’s where it comes up quite often. An employee get a bonus. It is a single check. If you don’t modify your withholding on that check, and go by the IRS table, they will withhold way too much.
I do payroll and I tell my employees they can change their withholding every pay period if they want. It’s no big deal on my end. Takes 2 seconds.
“One can ask - why would anyone need to do this as only the Richie Rich estates are subject to estate tax… You need to do this because the size of your estate is not known until the moment you die. ”
Apparently the ultra-wealthy are already gearing up for mass transfer of wealth before the new (2018) limits expire. I guess filing the gift tax form also allows the IRS to determine which laws were in effect when the assets were transferred.
Well, unless I win the lottery, and the shock of winning kills me… I’m pretty sure what my “estate” won’t be. It’s not like extra money is going to materialize out of thin air. Oh, and did I mention that I never buy lottery tickets?
How? The lifetime gift limit doesn’t change under the new law. In the first few versions of the law I read, it remained at $5.5M. Did it change in the final version? Unless it changed, the only way you can transfer is to die before the new limit expires. Besides, it’s not that simple. If you transfer before you die, you lose step-up basis. For many people, that costs more than the estate tax itself. I am quite sure the ultra rich are very well aware of the intricacies.
As it should be. Let the ultra rich deal with it. But don’t forget, it was just several years ago that the limit was $600,000. You just never know.
On the estate/gift tax issues: https://www.forbes.com/sites/ashleaebeling/2017/12/21/final-tax-bill-includes-huge-estate-tax-win-for-the-rich-the-22-4-million-exemption/#bef697f1d541.
In other words, if you happen to have a spare $15 million around, you should give it to your kids now.
https://www.forbes.com/sites/ashleaebeling/2017/12/21/where-not-to-die-in-2018/#2e85eed25b1b
Don’t die in these states! Oregon’s exclusion is ‘only’ $1,000,000. Most states, however, have no estate or inheritance tax.
I am definitely living in the wrong state. But I don’t want to move.
Ran the tax reform calculator for my family. My youngest son will save $2,092, my older son will save a whopping $219 (though it would be $2,841 if he lived in Washington instead of California). My parents will save $1,136 if I estimated their income correctly. Three different demographics.
I don’t feel like to be living in the wrong state, having the wrong parents and not rich enuf for my kids r for sure
@busdriver11 which tax reform calculator did u use?
@makemesmart, I used this calculator by Maxim Lott.
But it is very general and doesn’t include many things, this addresses what you have to figure out on your own.
@busdriver11 this link is helpful. Thank u! I don’t like this tax bill at all but guess we have to face the reality…
True, you have to plan for things one way or another. It certainly is easier to plan when you will be paying less, not more, that’s for sure.
@“Cardinal Fang”, I am a project manager consultant (on software projects mostly) and I have had an S-Corp for almost 20 years. There are some costs involved in the corporation, though. There are registration fees to set it up to the state, I pay an annual fee to the state AND the city I am located in, and my state has an excise tax on gross income (and they mean GROSS income – if I get reimbursed from a client for travel or something, I’m taxed on that reimbursement!). I pay an accountant for tax preparation (including monthly 941 filings with the federal government), and pay for liability insurance for the corporation. I also have to pay both sides of FICA (I mean the corporation pays one side and I have the other withheld) on the part I take as salary from the corporation (although that is not the entire income). Depending on the state you are in, he may want to pay an attorney to help with the initial setup steps, too. Oh, and the corporation has to pay unemployment taxes or jump through a bunch of paperwork and filing hoops to avoid them, even though as president he likely can never collect them.
Then any contract he accepts going forward has to be of a “corp to corp” type contract – so the company he is working for (either the end client or any consulting company he is working through) signs a contract with his company, not with him personally. (He probably signs as the president of the company). Problem, though – there are a fair number of clients and consulting companies that don’t want to do corp to corp contracts. It seems to vary somewhat by part of the country – my new state has a lot fewer companies willing to do it than my old state did. But maybe this will change with the new tax law?
I know that isn’t the purpose of this thread to discuss this, so PM me if you want more info, or we could start a separate thread. But I just laugh when everyone says there will be a rush to form corporations. There are costs and downsides to it, and it is quite a hassle. I’ve got it rolling pretty smoothly after all the years I’ve been doing it, but there are barriers and downsides to it.
The 20% passthrough deduction seems to be available to all Schedule C filers, so I don’t see any particular benefit for tax reasons related to the new law to reorganize into a different business form, at least on the lower end of the economic spectrum… (I don’t know whether there are benefits related to legal liability or to other, separate tax provisions- so I am not addressing that).
Higher end taxpayers run into the limits that prevent service providers (doctors, lawyers, accountants, consultants) from taking the 20% … merely setting up an S Corp or similar operation isn’t going to get around that by itself.
Why do you feel you are living in the wrong state? My son lives in Washington. 
Oh, I’m definitely living in the right state, @newjersey17 (except for dying here). But my older son lives in CA, and he’d be doing better if he lived in WA.
Oh good. I misunderstood your comment.
Thanks for the calculator.
I no longer live in NJ. I got out of there just in time.
I’m now living in Florida and I don’t know how to change my cc name (ha ha). Obviously the savings are much better than NJ along with no state income tax!
I also compared it to WA and it’s even better than WA but not by much. No clue why?
My young son also had the option of living in either WA or CA and we steered him towards WA which was a no brainer. He’s very happy he chose WA now that he sees how much he saves/pays in taxes.