On 12/28/2017 at 3:22 AM, GeorgiaHybrid said:

Kirk,

There are some of us that are required to fill out the long form whether or not our deductions exceed the standard. Some circumstances that force you to file that form are having self employment income or if you have sold property during the year as well as the amount of income you have.

I used to be based out of an AL office for work, but lived in GA,  My paycheck had AL taxes taken out of it, and at tax time I would get a credit from GA for the taxes I had paid to AL, however GA taxes were higher than AL, so I always owed GA and got money back from AL. I always had to file long form in this scenario and there were some years the standard deduction looked better from a federal tax point of view, but then I couldn't claim the taxes I paid into AL to get a credit for in GA. If you did the math, which I always did, I still came out better itemizing even if my federal deduction was less because in the end the money owed to GA would have totally cancelled out any extra I got from the feds.

Interesting enough for many years my end tax result was almost a total wash between what I owed and what I got back. I think one year I was maybe $57/to the positive which isn't a bad way to end the year. It meant I kept most of my money in my pocket all year and didn't give the feds a tax free loan for the year. 

Without a house mortage and interest to deduct and very little medical to claim, I'm looking forward to taking the standard deduction this year for the first time in many years!  

Edited December 28, 2017 by BlueLghtning

.And stuff like that will still apply in the future B.L.  for many people. The bs about filing on a post card was just that, bs. There are too many variables to make filing that simple for even nearly everyone.

There are too many powerful people in the tax management business for tax processing to be simple.

It sounds like with the doubling of the standard deduction and/or a "fix" in the code (if that happens) this may be a non-issue in the long run.

I am VERY impressed with all the people posting here. No partisan political comments, just constructive opinions on navigating through this new issue. Escapees is a special group.

  On 12/28/2017 at 10:35 PM, HelloFreedom said:

It sounds like with the doubling of the standard deduction and/or a "fix" in the code (if that happens) this may be a non-issue in the long run.

One thing that seems to be omitted from most discussions I've seen about the new tax law is that the ~$4k/person personal exemption has been eliminated.  So if you were a couple who used to take the ~$12k standard deduction you also were able to claim ~$8k in exemptions in addition.  But now, instead, you'll just be able to claim the $24k standard deduction (plus ~$2.k if you're both >65).  So, in reality, you haven't gained all that much.

OTOH, if you used to itemize deductions you could claim them and still be able to deduct the exemptions.  For example, for 2017 I'll have ~$23k in itemized deductions plus the $8k in exemptions.  But for 2018 and beyond, even if I manage to get my deductions over $24k I would no longer have the exemptions to add to that total.

Yes, the overall tax rates have also been decreased by a couple of percent, so on ~$75k of taxable income you'll save ~$2.8k by my calculations, but depending on your circumstances this may or may not be offset by the loss of the personal exemption.

There's no political motivation in this post, just an effort to explain the facts as I understand them to be.

I make a living dealing with taxes. Change, any change, ensures employment for as long as I desire.

Government costs a certain amount to run, increasing each year. Taxes and debt pays for it.

Shifting and altering income tax does not alter the actual bill to run government, just where we pay from. Some may see a short term pocket increase, but like with every reform, we will all end up paying later... more, not less, unless we actually see a time when government cuts real spending.

Some states will get a nice tax increase with federal withholding offsets being less. None of those states, yet, have decided to forego that increase, just like they have not in past years.

As one not so quality filter company said, "pay me now, or pay me later".

  On 12/30/2017 at 12:42 AM, Dp26 said:

Shifting and altering income tax does not alter the actual bill to run government, just where we pay from. Some may see a short term pocket increase, but like with every reform, we will all end up paying later... more, not less, unless we actually see a time when government cuts real spending.

That is probably the only certain statement of the entire issue. There is a very large share of the population which paid no federal income tax previously and it looks to me like that isn't going to change. Pew Research Center says:

 
Quote

By contrast, taxpayers with incomes below $30,000 filed nearly 44% of all returns but paid just 1.4% of all federal income tax – in fact, two-thirds of the nearly 66 million returns filed by people in that lowest income tier owed no tax at all. (The IRS tax data used here are estimates based on a stratified probability sample of all returns.)

 

While it doesn't say so, I suspect that the $30k level is based on adjusted gross income, I also suspect that more than a few of us who participate here are in that group who pay no federal income tax. 

Edited December 30, 2017 by Kirk Wood

  On 12/30/2017 at 10:35 PM, Kirk Wood said:

While it doesn't say so, I suspect that the $30k level is based on adjusted gross income, I also suspect that more than a few of us who participate here are in that group who pay no federal income tax. 

But don't forget that even though we don't pay income tax, if we are employed by someone or as work as an independent contractors we still have to pay FICA or self-employment tax. For many lower income people, this is their primary tax burden.  I realize it's not an "income tax" but TurboTax lets me know I need to pay it to IRS by April 15!

Everything we buy and sell includes enough to cover taxes, charge card fees, fraud, discounts to others, etc. We all pay on some form.

  On 12/30/2017 at 12:19 AM, docj said:

One thing that seems to be omitted from most discussions I've seen about the new tax law is that the ~$4k/person personal exemption has been eliminated.  So if you were a couple who used to take the ~$12k standard deduction you also were able to claim ~$8k in exemptions in addition.  But now, instead, you'll just be able to claim the $24k standard deduction (plus ~$2.k if you're both >65).  So, in reality, you haven't gained all that much.

Yes, the overall tax rates have also been decreased by a couple of percent, so on ~$75k of taxable income you'll save ~$2.8k by my calculations, but depending on your circumstances this may or may not be offset by the loss of the personal exemption.

Excellent point.  If you look at the overall "deduction from income" of personal exemption plus standard deduction for 2017 and prior to the standard deduction only of 2018, singles and couples who don't itemize will basically see a 15% increase in "deduction from income".  Those who have been able to itemize will likely see a smaller % increase (and potentially a decrease if there are multiple dependents and/or they are affected by the SALT cap) in "deduction from income" with the upcoming changes.

Edited December 31, 2017 by mkc