CDZ State and local tax limitation on tax deductibility

Discussion in 'Clean Debate Zone' started by usmbguest5318, Dec 17, 2017.

  1. usmbguest5318
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    usmbguest5318 Gold Member

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    Do any of your clients have children?
    • If so, what has your detailed analysis of the termination of personal exemptions (~$4K/individual) in comparison to the increased standard deduction and child care credit revealed?
      • At what point do the increased standard deduction and changes to the child care credit cease to exceed the sums excludable from taxable income under the pre-GOP-bill tax code?
     
  2. yiostheoy
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    yiostheoy Gold Member

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    You need to look at the whole tax picture.

    Run it side by side under the old and new law.

    You can't just cherry pick provisions that you like or don't like.

    I like the SALT limitations.

    And overall this is a huge tax cut for the rich who are the ones with the big SALT deductions, mostly property tax.

    Calif and NYS will be pressured to drop their taxes too since the Feds will no longer subsidize them.
     
  3. Tax Man
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    Tax Man Gold Member

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    There is no subsidizing of taxes in California. The SALT deduction is to prevent tax monies paid from being taxed again as income.
     
  4. task0778
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    task0778 Gold Member Gold Supporting Member Supporting Member

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    First of all, after 5 days of this new tax plan being out there, I have seen absolutely NOTHING from anybody on the web or in the media about any anybody who can avoid the $10,000 limit on the SALT deduction. I am not believing that the NYT, WaPo, HuffPo, and others have not identified this and pointed this out and bitched about it as a way for the rich guys to avoid the limit. I don't care what was in Trump's tax plan, I don't care what was in the House bill, and I don't care what the current IRS law is now before the tax bill goes into effect. All I care about is what is in the final tax bill that will be voted on the next few days, your tax advisor not withstanding. Ask him for where in the new tax bill he found where the exceptions are to get around that limit.


    As for the 11th hour carve out, if I understand it right it's probably there more for people who have owned farms and ranches for generations. I highly doubt that the provision you refer to was done just for Trump as you imply. Nobody on either side is going to allow that, get real.
     
    Last edited: Dec 18, 2017
  5. usmbguest5318
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    usmbguest5318 Gold Member

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    Seriously? That's nebulous drivel is your response to a very specific question that is more than apropos to ask you...Either your clients (in their business capacity as your clients) have children or they don't. If they do, and you are a first-rate financial advisor, you'll have performed the analysis of which I asked because it's the most basic analysis that every such advisor can perform.

    For individuals who did not itemize in 2017 and won't in 2018, the analysis is simple:
    2017 Calculation:
    AGI
    Less: Standard deduction ($6,350 or $12,700)
    Less: $4050 per household individual, dependent, or spouse (personal exemptions)
    Less: Qualified child tax credit (the refundable $1K/kid CTC phases out in direct proportion to income)
    Total 2017 federal income tax liability
    2018 Calculation:
    AGI
    Less: Standard deduction ($12,200 or $24,400)
    Less: Qualified child tax credit (click here for the new terms of the CTC)
    Total 2018 federal income tax liability
    To obtain a visual depiction, simply perform the calculations assuming the taxpayer qualifies for the full credit and full refundability (because people who don't are wealthier, though not at all wealthy) and graph the two 2017 equations and the two for 2018. Where the 2018 line crosses any given 2017 line is found the point whereafter the 2017 provisions result in a lower tax liability for filers to whom the given 2017 line applies and who, in determining their taxable income, are entitled to nothing more than the noted exclusions.

    When comparing the financial impact of a tax provision, one must identify and evaluate the "apples to apples" provisions. In the case of the standard deduction and personal exemptions, they are the only provisions for which everyone potentially qualifies simply by dint of humans being within a given taxpayer's household.


    FWIW, the two basic equations, absent the CTC component are:
    • 2017
      • y = 4050x + 6350
      • y = 4050x + 12,700
    • 2018
      • y = 12,200
      • y = 24,400
    Insofar as you purport to be some sort of financial analyst (see quoted passage below), I'll leave you to derive the function for the CTC component. It's not hard, but it's the least you can contribute to this discussion given your remarks.

    Are you any kind of tax/financial advisor, strategist, or planner? My advisor has performed that analysis, albeit with regard to the loss of the personal exemption and changes to itemized deduction provisions rather than with regard to the standard deduction. (I don't qualify for the CTC.) Obviously, one cannot perform an itemized-deduction-based analysis for anyone whose details one doesn't know.
     
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    Last edited: Dec 18, 2017
  6. usmbguest5318
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    usmbguest5318 Gold Member

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    ??? I provided in the post to which you replied the link to the discussion of which I'm aware and that pertains to avoiding the SALT ceiling. What more do you expect me to do? (BTW, that question is rhetorical.) Were you to click on that link, you'd see what I've about it seen on the Internet.
     
  7. usmbguest5318
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    usmbguest5318 Gold Member

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    OT:
    While insouciance of the sort you attest to having is certainly your right to have, that sort of disinterestedness materially comprises why the middle class in the U.S. find themselves on the short end of the tax "stick."​
     
  8. task0778
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    task0778 Gold Member Gold Supporting Member Supporting Member

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    The only pertinent link (in November) I see from you refers to the House bill rather than the final bill and they ain't the same. To repeat: there is no mention anywhere that indicates that final tax bill allows anybody to avoid the $10,000 SALT deduction limit. NOTHING. There are numerous articles and columns about what's in that final bill, yet there is NOTHING, not even from the left-wing websites that says ANYTHING about any such loophole or exception.
     
  9. task0778
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    task0778 Gold Member Gold Supporting Member Supporting Member

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    C'mon dude, who gives a crap about what was in Trump's plan or the House bill or the Senate bill? The only thing that matters is what is about to be signed into law if it passes through Congress in the next few days. You can blather all you want about anything else all you want but it means absolutely nothing. And BTW, the middle class are getting a bigger relative tax cut than the rich guys are.
     
  10. usmbguest5318
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    usmbguest5318 Gold Member

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    You just keep thinking that....
     

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