Final Final Tax Plan

[Singuy]

Tax Brackets:

10% (income up to $9,525 for individuals; up to $19,050 for married couples filing jointly)
12% (over $9,525 to $38,700; over $19,050 to $77,400 for couples)
22% (over $38,700 to $82,500; over $77,400 to $165,000 for couples)
24% (over $82,500 to $157,500; over $165,000 to $315,000 for couples)
32% (over $157,500 to $200,000; over $315,000 to $400,000 for couples)
35% (over $200,000 to $500,000; over $400,000 to $600,000 for couples)
37% (over $500,000; over $600,000 for couples)

--Standard Deductions: For single filers, the bill increases it to $12,000 from $6,350 currently; for married couples filing jointly it increases to $24,000 from $12,700.

--Eliminates personal exemptions

-- Caps state and local tax deduction: $10,000

--The credit would be doubled to $2,000 for children under 17, phase out @ 200k single or 400k joint.

--500 dollar tax credit for every non children dependent

--AMT: reduces the number of filers who would be hit by it by raising the income exemption levels to $70,300 for singles, up from $54,300 today; and to $109,400, up from $84,500, for married couples.

--Lowers tax burden on pass-through businesses: 20% deduction on pass through profit, phase out @ $315,000 if married ($157,500 if single) for service industry

[Singuy]

This tax cut is savage. I am looking at a 30k tax break next year (a reduction of 35% of our total taxes paid compared to 2017!). They have basically eliminated the marriage tax penalty unless the household makes 600k or more. And holy moly on those tax brackets. Our taxable income is most likely going to be under 300k/year..I used to pay 33% for a good chunk of my income. Now it's 24%!. Also the 20% deduction for pass through is another gift...as well as the child tax credits!

[disneysteve]

If this plan gets passed, we’d drop from the 28% bracket to 24%. I don’t know how all of the other changes would affect us though.

[Singuy]

We have 2 children, before we can take their personal exemptions but not any child tax credit.

So with the new plan

-1944 savings in exempiton
+4000 tax credit


My wife's income pass through from her Scorp is about 160k/year. Now it's taxed as 128k passed though so that's 32k we don't have to pay taxes on vs 2017@33%. So

+10560 tax saved

Now 128k of taxable income + about taxable of 30k of payroll income + my 100k of taxable income = 258k -~7% in tax reduction due to brackets

+18060

Also before if my wife was taxed at 160k, we would go over the 250k threshold which means additional medicare surge tax of 2.3%. So

+920

AMT, no idea how this is figured out so I'll leave it alone.

Total savings ~ $31596

Hey if you make the national median of 53k/year..your household will save what like a few hundred bucks?

Yeah, the liberal fake news are wrong again, this tax bill is not a massive cut for the rich!

https://www.nytimes.com/interactive/2017/11/28/upshot/what-the-tax-bill-would-look-like-for-25000-middle-class-families.html

At this rate, we wouldn't have enough money for cops/jails and judges. Time for some consolidation! Judge Dredd Era, Cop, Judge, Executioner!..

[corn18]

We have 2 children, before we can take their personal exemptions but not any child tax credit.

So with the new plan

-1944 savings in exempiton
+4000 tax credit

You won't get the child tax credit at $258k taxable income.

My wife's income pass through from her Scorp is about 160k/year. Now it's taxed as 128k passed though so that's 32k we don't have to pay taxes on vs 2017@33%. So

+10560 tax saved

This is a good thing. If this happens enough, maybe small businesses will grow. Maybe not. But I support this approach.

Now 128k of taxable income + about taxable of 30k of payroll income + my 100k of taxable income = 258k -~7% in tax reduction due to brackets

+18060

Also before if my wife was taxed at 160k, we would go over the 250k threshold which means additional medicare surge tax of 2.3%. So

+920

AMT, no idea how this is figured out so I'll leave it alone.

Total savings ~ $31596

Hey if you make the national median of 53k/year..your household will save what like a few hundred bucks?

Yeah, the liberal fake news are wrong again, this tax bill is not a massive cut for the rich!

https://www.nytimes.com/interactive/2017/11/28/upshot/what-the-tax-bill-would-look-like-for-25000-middle-class-families.html

At this rate, we wouldn't have enough money for cops/jails and judges. Time for some consolidation! Judge Dredd Era, Cop, Judge, Executioner!..

I'm in the top .1% in income and I will pay more taxes with the new law. So your generalization doesn't hold water.

[Like2Plan]

Wait a minute... I thought they were going to get rid of AMT? What happened?

[Singuy]

Tom, using Cnn's calculator, seems like with an income of 500k+, your taxes will decrease by 2.6% in states like California with state income tax. Goes down slightly more in states like FL.

Also I will now get the child tax credit because the phase out changed from 130k for joint filers to 400k for joint filers.

[corn18]

This seems to be the best link to the actual bill and some good explanations.

http://docs.house.gov/billsthisweek/20171218/CRPT-115HRPT-466.pdf

[Singuy]

Wait a minute... I thought they were going to get rid of AMT? What happened?

They got rid of corporate AMT but not individual AMT.

So now Corporations can deduct away without any minimum tax it needs to pay.

[disneysteve]

using Cnn's calculator

According to that, for 2018, our after-tax income will go up by 2.6% but by 2026 it will be negative 0.4%.

I don't know what this calculator is based on since there are so many intricacies to our taxes so I have no idea how accurate this estimate is. Some of our income is from W-2 work, some is from investments, some is from self-employment. What about all of the deductions? I know some might go away but others will stay I think.

Until there is an actual plan approved and in place, all of this is just supposition about how it might possibly affect us.

[james.hendrickson]

Looks like the latest tax bill will also have substantial reductions in business taxes. This should have derivative benefits for investors and direct benefits for business owners.



Source: Daily Mail,15 Dec 2017

[sblatner]

What in the world does the Arctic have to do with revising the tax structure? I hate how they stick unrelated stuff in new laws.

[corn18]

According to that, for 2018, our after-tax income will go up by 2.6% but by 2026 it will be negative 0.4%.

I don't know what this calculator is based on since there are so many intricacies to our taxes so I have no idea how accurate this estimate is. Some of our income is from W-2 work, some is from investments, some is from self-employment. What about all of the deductions? I know some might go away but others will stay I think.

Until there is an actual plan approved and in place, all of this is just supposition about how it might possibly affect us.

It's a lot more probable today than it was two months ago. I didn't take any action 2 months ago. I am now. If I sat back and waited for it to pass, I would have missed out on $4,585. It's worth studying the details to see if doing something this year vs. next might be a smart thing to do.

[Singuy]

There are provisions in this tax plan in which if I'm not careful, I can end up paying a boatload more.

20% deduction on business pass through is only good for service type businesses if our joint taxable income is under 315k/year. So if we had 315001 for the year, the perk disappears.

This means in the future I may have to increase my wife's salary just so the business can contribute more into her solo 401k which decreases profit(business can contribute a max of 35% of the individual's salary, which means way beyond the individual contribution of 18500). I don't even know if there's a max to this contribution. So if I just keep increasing her salary, I may be able to continue to increase contribution.

See? Found a loophole already....

[disneysteve]

It's worth studying the details to see if doing something this year vs. next might be a smart thing to do.

But there's no way to be sure because we don't know what the final rules will actually be. If you saved $4,500, that's great, but you won't actually know until after the bill passes.

Maybe I'll shoot my accountant an email (he's a friend our ours) and see if there's anything he's advising clients to do in anticipation of the most likely changes.