Why is the new proposed tax bill be bad for lower and middle income people?

Discussion in 'Political Discussions' started by Abner, Dec 18, 2017.

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  1. Ian Anderson

    Ian Anderson Active Member

    I just paid my property taxes early for next year (2018). That along with the purchase of a new car will enable me to itemize for 2017 tax year.
     
    Abner likes this.
  2. Ian Anderson

    Ian Anderson Active Member

    Abner - you get a refund if you have to much money deducted from your pay check. Conversely you owe taxes if you did not have enough deducted.

    Personally I plan my taxes such that I always owe taxes - that helps me in two areas: (1) I earn interest on that money, and (2) It is more difficult for a fraudster to claim a tax refund on my account.
     
  3. Abner

    Abner Well-Known Member

    From what I have read a lot of people are rushing to do there taxes before the end of the year so they still get to itemize.
     
  4. Abner

    Abner Well-Known Member

    Thanks! My wife and I have money voluntarily deducted from our paychecks so we always get a refund. We like it that way.
     
  5. decimon

    decimon Well-Known Member

    That makes no sense.
     
  6. decimon

    decimon Well-Known Member

    No, I've been penalized within my state by the leftwitted like Cuomquat and De Blasshole.
     
  7. nosborne48

    nosborne48 Well-Known Member

    Maybe what Abner is referring to is that some people are making their charitable contributions (i.e. synagogue dues) and other deductible cash payments early, before the end of 2017, instead of paying them in the usual manner in winter and spring 2018. There's something to be said for this approach if you can afford to do it but it's a "one-off"; this situation is unlikely to occur again in the near future.

    I admit that I'm looking forward to the simplification of my personal tax return. All those stupid receipts and records for various deductions won't be needed any longer. Hooray!
     
    Last edited by a moderator: Dec 23, 2017
  8. Abner

    Abner Well-Known Member

    Yes, that is what I meant. I didn't know how to explain it. Thanks!
     
  9. sanantone

    sanantone Well-Known Member

    So, you have no problem with paying for so many people in poor states to be on welfare or receive back tax money they never paid. Got it.

    I assume that less people will make charitable contributions in the future for the purpose of tax deductions, which means more dependence on the government for social programs.
     
  10. nosborne48

    nosborne48 Well-Known Member

    An interesting question! I don't know, though. In my experience, anyway, few Americans know much about their own taxes and most donate because they feel a moral obligation to do so. Remember that according to the tax foundation, only about 30% of Americans itemized as it is. Those that didn't couldn't claim a deduction for charity yet I'm quite sure they gave. Really large donors will still get the deduction.
     
  11. sanantone

    sanantone Well-Known Member

    Last edited by a moderator: Dec 24, 2017
  12. Ian Anderson

    Ian Anderson Active Member

    I inadvertently overpaid my 2016 taxes in March 2017 by missing a deduction; the IRS corrected my return, returned my overpatment, and emailed me a interest income statement. Turns out I earned 4% return on the over payment - not bad when my bank savings account pays me 0.1%.
     
    Abner likes this.
  13. Abner

    Abner Well-Known Member

    Good deal! :)
     
  14. Abner

    Abner Well-Known Member

    Ian or Nosborne,

    Excerpt from the tax policy center:

    As of 2017:

    "Although that income is not taxed, homeowners still may deduct mortgage interest and property tax payments as well as certain other expenses from their federal taxable income. Additionally, homeowners may exclude, up to a limit, the capital gain they realize from the sale of a home."

    So, will the above deduction no longer be available this year? And if so, what is the advantage in being a homeowner now? Will the loss of this deduction be offset in some manner? I hope my question makes sense. I think this was discussed earlier, but I just want clarification.

    Thanks! :)
     
  15. Ian Anderson

    Ian Anderson Active Member

    I do not know the answers to your first questions. Hopefully detailed regulations (such as an updated Publication 17) will be released by mid-year.

    However, at least here in the Denver area, mortgages can be lower cost than renting. And of course a fixed income mortgage payment is steady until paid off; whereas a rent payment will keep increasing. Also in Colorado there is a significant deduction in property tax for seniors.
     
    Abner likes this.
  16. FTFaculty

    FTFaculty Well-Known Member

    My friend the tax prof and my wife (our family's tax preparer, as she's the one who's good with the numbers) have been looking into the implications of the new plan, and one potential consequence is many with large families will get hit hard because even though the standard deduction and the child tax credit has been increased, this may not be enough to offset the loss of individual child tax deductions. This may increase the tax bill, in some cases substantially, for those who have unusually large families, such as us. Many Trump supporters who are Republican, Christian, pro life and have big families may get a lump of coal for Christmas rather than that big gift Trump was promising. While we don't fit the category of Republican (not party people) or Trump voter (will never vote for the man), we are Christian, pro life, and have a massive family (I may not be very accomplished, but I am fertile).

    To make up the shortfall, I can always stir up some more action teaching professional seminars (and boring rooms of accountants and fraud investigators) on the side, but that involves jumping in the car or flying on a plane and being apart from the family more. We're not exactly feeling the love from those "pro-family" congresspeople and this administration! And my wife gets that strained look in her eyes when I leave her for a day or two with the wild ones. Kid you not, she bought a pair of those ear protection things at the big box home improvement store, like they wear at construction sites, just to get through the day.
     
    Last edited: Feb 4, 2018
    Abner likes this.
  17. nosborne48

    nosborne48 Well-Known Member

    Earlier in this thread I asked the same question about the tax treatment of children. Heirophant explained why I was mistaken. As to the deduction for mortgage interest, I gather that interest paid to purchase or improve a personal residence (and a vacation home too!?!) is deductible but interest on personal debt used for other purposes secured by one's residence will no longer be deductible. I'd have eliminated all interest paid deductions, personal, investment, mortgage, and business related, but that's just my thinking.
     

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