# 2018 Federal Income Tax Highlights



## Miss Marty (Nov 28, 2018)

_Form 1040 has been redesigned for 2018
Form 1040A and 1040EZ will no longer be used. _

Tax reform was passed by Congress - some of the changes include:

• Change in tax rates. Most rates have been reduced.

• Rhe standard deduction amount has been increased for all filers.

The amounts for 2018 are:
• Single or Married filing separately  $12,000.
• Married filing jointly or Qualifying widow(er) $24,000.
• Head of household  $18,000.

• Personal exemption suspended.

You can’t claim a personal exemption deduction for yourself, your spouse, or your dependents.

• Increased child tax credit. The child tax credit amount has been increased.

• New credit for other dependents. A new credit of up to $500 may be available for each dependent who doesn’t qualify for the child tax credit.

• Changes to itemized deductions. These changes include limiting the deduction for state and local taxes and eliminating both the deduction for miscellaneous expenses and the overall limit on itemized deductions.

For details on these and other changes, preview

What’s New

https://www.irs.gov/pub/irs-dft/i1040gi--dft.pdf

This is an early release draft (119 page pdf)
IRS tax forms, instructions, and publications

Note: Do not file draft forms

*Due date of Federal Return
File Form 1040 by April 15, 2019.


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## plpgma (Nov 29, 2018)

Yes -- Filing for 2018 taxes will be a learning experience for all!


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## bluehende (Nov 29, 2018)

I have been surprised by how many people I know do not realize that the personal exemption is gone.  I think there are going to be some surprises for a lot of people.  Hopefully the withholdings have been good so it won't be a problem.


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## bogey21 (Nov 29, 2018)

Quite frankly I am ignoring the whole thing (maybe to my detriment, who knows?).  My plan is to log on to Turbo Tax next time I file as I have done for the last 20 years or so and let Turbo Tax figure it all out for me.  If after reviewing my Return and comparing it to prior years Returns, I see something I need to change, I will look at making the change going forward.  Simplistic? Yes, but stress free...

George


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## PigsDad (Nov 29, 2018)

plpgma said:


> Yes -- Filing for 2018 taxes will be a learning experience for all!


For me, it will make my return much simpler since I will not have to itemize deductions.  But that will only be for ever other year, as we are planning on bunching our charitable contributions to every other year, so that it will pay for us to itemize in those years.  We will also push property tax payments in those same years, but it is unclear if that will help due to the SALT limitations.

Kurt


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## JohnPaul (Nov 29, 2018)

I’m a bit worried. I live in California and think my taxes will be going up.  No real way to know until doing our taxes.


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## Tia (Nov 29, 2018)

I'm waiting to see the increase in my take home pay................ so far haven't noticed it


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## taterhed (Nov 29, 2018)

Smoke and mirrors.  You can google the 'who gains'  'who loses' and see the general effect of the new law...

Here is an EXCELLENT chart that shows  "old"  "new"  "effects"   on a side by side chart.  Very easy to read:  https://www.fbco.com/wp-content/uploads/2018/06/tax-reform-individual-changes-chart.pdf

Here's the bottom line for those without excessive SALT deductions that can't be avoided:


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## bluehende (Nov 29, 2018)

View attachment 9236[/QUOTE


taterhed said:


> Smoke and mirrors.  You can google the 'who gains'  'who loses' and see the general effect of the new law...
> 
> Here is an EXCELLENT chart that shows  "old"  "new"  "effects"   on a side by side chart.  Very easy to read:  https://www.fbco.com/wp-content/uploads/2018/06/tax-reform-individual-changes-chart.pdf
> 
> ...



The chart does not take into account individual scenarios.  My itemized deductions were 23000 last year.  With the gain in standard and loss of personal exemption my taxable income has gone up 7000.  I am in the lowest bracket so my rate does not change.  So unless there is some advantage I am not aware of my taxes have gone up 700.


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## bogey21 (Nov 30, 2018)

I like being in the dark until Turbo Tax shows me what happened when I file.  Less stress..

George


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## bluehende (Nov 30, 2018)

bogey21 said:


> I like being in the dark until Turbo Tax shows me what happened when I file.  Less stress..
> 
> George



I worry a bit about penalties as I do not like to have the government hold my money interest free.  That is easily taken care of as long as you have as much with held this year as you owed last year.  I also like to manage a bit more.  I see a potential tax problem (good to have) when I have to start taking out of my retirement accounts and the long term capital gains I am sitting on.


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## rapmarks (Nov 30, 2018)

I don’t like being in the dark.  One year my mutual funds paid out huge amounts in December and a stock got called on dec 31.  I owed forty thousand additional income tax that year.  Not only did I have to pay that in April but I had to send in the same amount for the following year.   I like knowing what to expect.  It was real nice to get the capital gains, but they didn’t last long when the tax bill came.


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## bogey21 (Nov 30, 2018)

I don't know how the penalties are calculated for being under withheld.  All I do know is that my income moves around a lot from year to year and that I owe the IRS money every year when I file.  I have only been assessed a penalty one time in over 20 years, and it was small...

George


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## Miss Marty (Dec 21, 2018)

*Change in Maryland State Tax on Military Retiree Income*

(Hometown Heroes and Veterans Act of 2018) Individuals Age 55
Maryland Income Tax Subtraction Modification Retirement Income

http://mgaleg.maryland.gov/2018RS/chapters_noln/Ch_573_sb0996E.pdf


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## bbodb1 (Dec 21, 2018)

When I first read this thread title, I was thinking here was another candidate in the long list of oxymorons......


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## Miss Marty (Jan 7, 2019)

The IRS announced Monday, that despite the
government shutdown, it will process tax returns
starting Jan. 28 and issue tax refunds as planned,
a move ordered by the White House earlier today.


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## Talent312 (Jan 8, 2019)

Mine is relatively simple (except for determining taxable SS).
But I was able to design a spreadsheet and run the numbers.
It seems I'll owe some, so I won't be in any hurry to get it done. 
.


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## Miss Marty (Feb 12, 2019)

*Get Transcript 
@ IRS.GOV 
*
You can get various Form 1040-series transcript types online or by mail. If you need your prior year Adjusted Gross Income (AGI) to e-file, choose the _tax return transcript_ type when making your request.

There is a new transcript format that better protects your data. This new format partially masks your personally identifiable information. Financial data will remain fully visible to allow for tax preparation, tax representation or income verification.

About the New Tax Transcript and the Customer File Number.


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## VacationForever (Feb 12, 2019)

I posted on another thread that I have a spreadsheet that maps out our income and expenses for the next 20 years.  On my spreadsheet we will owe $5,892 in 2018 taxes, and we should not have a penalty because we paid 0 taxes last year.  Let's see if my number comes within $100 of my estimate when we put them into Turbo Tax.  We are still awaiting the official tax statements from the brokerage firm, and we are ready to put in the numbers.  From my calculation, despite having high medical costs, taking standard deduction is advantageous to itemized deduction.


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## Shankilicious (Feb 12, 2019)

File and got my federal return with a week. The standard deduction of 24000 came within 800 of what we would have gotten itemized. This was the plan I'm sure, to have a lot more people just go with the standard so filing will go quicker.


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## SmithOp (Feb 12, 2019)

Filed Jan 31st and got my direct deposit yesterday.  Standard deduction, got a little extra for being 65 or over.


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## Sea Six (Feb 13, 2019)

Our taxes are down about 14%.  The standard deduction takes away all the things we used to itemize.  I'm actually concerned about the charitable contributions since they don't help reduce our taxes anymore.


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## amycurl (Feb 13, 2019)

Trust me, everyone in the nonprofit sector is worried about that as well....


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## taterhed (Feb 15, 2019)

Hmmm.

My comment about taxes and charity is hereby self-redacted.


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## Miss Marty (Feb 15, 2019)

*~ The Tax Cuts and Jobs Act ~

How Will the Recent IRS Tax Law 
Changes Affect You ?  (Highlights)
*
The standard deduction has doubled.

The rates for the seven income tax brackets 
for individual taxpayers have changed.

Taxpayers can now get up to $2,000 per child under age 17, 
and under the new tax law more taxpayers can claim it.

Taxpayers won’t be penalized for not buying 
health insurance in 2019 but what about 2018? 

_The new tax law caps - State and Local Tax _
_deductions, also known as SALT, at $10,000._

Source: Key Tax Law Changes Online @

https://www.taxslayer.com/tax-reform


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## DavidnRobin (Feb 16, 2019)

Miss Marty said:


> *~ The Tax Cuts and Jobs Act ~
> 
> How Will the Recent IRS Tax Law
> Changes Affect You ?  (Highlights)
> ...



Highlights?
Exemptions have been eliminated.

This pretty much eliminates the benefit of the increase in Standard Deduction - that in turn will reduce Charitable Contributions (which is occurring).


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## SmithOp (Feb 16, 2019)

DavidnRobin said:


> Highlights?
> Exemptions have been eliminated.
> 
> This pretty much eliminates the benefit of the increase in Standard Deduction - that in turn will reduce Charitable Contributions (which is occurring).
> ...



Still a PITA for tax preparers because States did not follow Federal changes.  I still have to itemize CA State return even when the Fed is using Standard.  

Healthcare SRP/PTC is still active for 2018.


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## #1 Cowboys Fan (Feb 16, 2019)

It stinks to have say 15-20k in REAL Deductions, and not be able to get any 'credit' for them.
(Last year we got to get credit for the amount above ~12k)

Others may have only 3-5k in REAL Deductions---now we ALL get 24k as the Standard Deduction.

JMHO


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## VacationForever (Feb 16, 2019)

For us it stinks that wealth management fees can no longer be an itemized deduction.  It was a good reason to do away with our CPA but we really don't want to move away from wealth management.  SALT does not really impact us as we don't pay that much in property tax.


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## rapmarks (Feb 16, 2019)

My daughter is a single parent with three children, she is going to be in for a surprise. She has lots of deductions for medical, can no longer deduct home office, spends a lot on unreimbursed expenses required for employment.


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## Miss Marty (Feb 17, 2019)

e-file

How long has it been taking for the IRS
to "accept" Turbo Tax e-filed returns ?

Once the IRS "accepts" your e-filed return
and it is approved/processed. How long is
it taking this tax season to get your refund?

According to the Protecting Americans from Tax Hikes (PATH) Act, the IRS cannot issue EITC and ACTC refunds before February 15. The IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or debit cards on February 27, 2019, if these taxpayers chose direct deposit and there are no other issues with their tax return.


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## lovetotravel77 (Feb 18, 2019)

rapmarks said:


> My daughter is a single parent with three children, she is going to be in for a surprise. She has lots of deductions for medical, can no longer deduct home office, spends a lot on unreimbursed expenses required for employment.


If her children are under 17, the child tax credit was raised from $1,000 to $2,000 each child, if the child is 17 or older and meets the tests for a dependent, there is a new $500 credit for other dependents. If she has 3 children under 17, that's $3000 more in tax CREDITS, which should help the loss of the deductions, tax credits are deducted from the tax liability and the tax rates were decreased. Hope it helps her!


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## bogey21 (Feb 18, 2019)

Miss Marty said:


> How long has it been taking for the IRS
> to "accept" Turbo Tax e-filed returns ?
> 
> Once the IRS "accepts" your e-filed return
> ...



Historically I have found that the IRS "accepts" a Turbo Tax e-filed return in less that 24 hours, sometimes almost immediately.  As to refunds this year, I don't know.  I haven't filed yet...  

George


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## pittle (Feb 19, 2019)

bogey21 said:


> I don't know how the penalties are calculated for being under withheld.  All I do know is that my income moves around a lot from year to year and that I owe the IRS money every year when I file.  I have only been assessed a penalty one time in over 20 years, and it was small...
> 
> George



I just found out today that the key is that you pay estimated taxes for as much as you paid last year.  Luckily we had - we had taken some extra money out and did not pay estimated taxes on it, so we ended up owing just over $900.  I had to fill out a Form 2210 and put in an explanation statement.  I could not get to the 3rd section to change what TT put in.  My return was rejected until I put in an explanation.  It is in now!


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## Miss Marty (Mar 1, 2019)

*Transmission - Acceptance - Processing - Approval - Refund

e-filed using Turbo Tax Online
*
How long did it take for the IRS
& State to accept our tax return?

We e-filed our Federal tax return
and received a notice of arrival
that it was accepted (within 15 minutes)

We e-filed our State tax return
and received a notice of arrival
that it was accepted (8 hours later)


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## MOXJO7282 (Mar 2, 2019)

I seriously got whacked. Eliminated higher education deduction for my son $11k and also the cap on SALT another $7.


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## Steve Fatula (Mar 2, 2019)

My tax return was definitely simpler this year. I no longer need to keep receipts for so many things I used to have to as there's no possible way I will reach $24,000 for DW and I. That will be a major time savings. It will not impact our charitable contributions as they have nothing to do with taxes for us. Most likely we are ahead, however, we can't compare to previous years as our income situation is much different as I retired last year. Pretty much, it had to be better for us at least. Any major tax change will always result in winners and losers. Winners will typically be happy, losers will typically not be.


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## Talent312 (Mar 2, 2019)

How much time it takes has no impact on us, as we owe some.
IOW, IRS will have to wait for our return until about April 12th.


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## bogey21 (Mar 2, 2019)

DavidnRobin said:


> This pretty much eliminates the benefit of the increase in Standard Deduction - that in turn will reduce Charitable Contributions (which is occurring).



The last thing I think about when I make a Charitable Contribution is whether or not it is tax deductible.  Said another way, the Tax Code is not going to dictate my behavior...  

George


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## DavidnRobin (Mar 2, 2019)

bogey21 said:


> The last thing I think about when I make a Charitable Contribution is whether or not it is tax deductible.  Said another way, the Tax Code is not going to dictate my behavior...
> 
> George



Whether you care or not - it is severely impacting charities. 
Are you writing off your donations, or donating w/o the Deduction?
Probably the former...

There can be a decision point whether to bother donating vs. throwing away when in that no benefit  zone.

This is an impact of the Tax Act.

Effectively people with higher income get a benefit while those in lower incomes do not. Actually seems backwards.  IMO

The advantage in the increase in STD Deduction is basically equalized by the elimination of personal deductions.


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## VacationForever (Mar 2, 2019)

Last year we wrote a nice check to a charity of our choice knowing that it would not make a difference in our tax deduction.


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## rapmarks (Mar 2, 2019)

You can donate your RMD or part of it and avail paying taxes on allor part your RMD


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## DavidnRobin (Mar 2, 2019)

rapmarks said:


> You can donate your RMD or part of it and avail paying taxes on allor part your RMD



You can also pay this forward thru a Donor Trust to potentially take advantage of ‘Tax Valley’ - this allows for donation of cash (or equivalent - eg. Stocks) that can be rolled forward.
This way you can take advantage of changes in current/future tax situation.

btw - I am not saying individuals will stop because of the changes in Itemized Deduction levels, but it is happening on a Macro level.

Cash donations to charities are dropping. I am personally familiar with 3 local organizations that have seen a drop off. And likely to get worse as some Filers realize this.l going forward.

On the plus side - thanks to Maria Kondo (and Baby Boomers downsizing like us...) - donations of non-cash items have increased.


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## Steve Fatula (Mar 2, 2019)

DavidnRobin said:


> The advantage in the increase in STD Deduction is basically equalized by the elimination of personal deductions.



For some people, definitely, for many, definitely not! If I never reached the standard deduction before the change, I will certainly gain, right? Remember, a large part of the taxpayer base never itemizes. Basically, 70% in the past years.


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## DavidnRobin (Mar 2, 2019)

Steve Fatula said:


> For some people, definitely, for many, definitely not! If I never reached the standard deduction before the change, I will certainly gain, right? Remember, a large part of the taxpayer base never itemizes. Basically, 70% in the past years.



It is generally a wash. Those into AMT get the most benefit - especially the more they make in Cap Gains.


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## rapmarks (Mar 2, 2019)

DavidnRobin said:


> It is generally a wash. Those into AMT get the most benefit - especially the more they make in Cap Gains.
> 
> 
> Sent from my iPhone using Tapatalk


That is my concern/hope that the amt will be less.  Waiting for last broker statement


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## rapmarks (Mar 2, 2019)

Form 8885 health coverage tax credit.  
Anyone with experience with this?
My sister had to purchase marketplace insurance, she received form 1095b. When I did her taxes, I answered yes to a question about this, she basically had no income,paid a high price for coverage, and the agent told her she would get credit on her income taxes, but I hope she doesn’t need another form or proof.


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## VacationForever (Mar 2, 2019)

rapmarks said:


> Form 8885 health coverage tax credit.
> Anyone with experience with this?
> My sister had to purchase marketplace insurance, she received form 1095b. When I did her taxes, I answered yes to a question about this, she basically had no income,paid a high price for coverage, and the agent told her she would get credit on her income taxes, but I hope she doesn’t need another form or proof.


If she had no income and bought through marketplace she should not have paid a high price for coverage.  It does not work this way.  When applyng through marketplace, it asks for estimated income of the year.  If she reported less than 138% of poverty rate, she would have been redirected to Medicaid.  If she reported more than that, the premiums would be adjusted with more subsidies for lower income.  If she bought silver, it would have been the best of both worlds as not only would she have gotten subsidized premiums but very low share of cost, i.e. max out of pocket.

If she reported too much but actually made less, say due to loss of her job, she would get a premium rebate when filing taxes.

I did go through ACA marketplace in 2017.


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## rapmarks (Mar 2, 2019)

VacationForever said:


> If she had no income and bought through marketplace she should not have paid a high price for coverage.  It does not work this way.  When applyng through marketplace, it asks for estimated income of the year.  If she reported less than 138% of poverty rate, she would have been redirected to Medicaid.  If she reported more than that, the premiums would be adjusted with more subsidies for lower income.  If she bought silver, it would have been the best of both worlds as not only would she have gotten subsidized premiums but very low share of cost, i.e. max out of pocket.
> 
> If she reported too much but actually made less, say due to loss of her job, she would get a premium rebate when filing taxes.
> 
> I did go through ACA marketplace in 2017.


She was told by agent that she would see on her income taxes where to get the rebate when filing taxes, and my sister went with her to ask the agent.  She had cobra for eight months and a nine hundred a month plan with a big deductible for four months.


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## VacationForever (Mar 2, 2019)

rapmarks said:


> She was told by agent that she would see on her income taxes where to get the rebate when filing taxes, and my sister went with her to ask the agent.  She had cobra for eight months and a nine hundred a month plan with a big deductible for four months.


Did she make much during that calendar year?  If she made very little, then she must not have filled the income question correctly to end up with $900 per month during the 4 months on ACA.  I avoided going to Medicaid and filled out just sufficient to cross the 138% of poverty line to get the maximum subsidies for both premiums and out of pocket, aka cost sharing.  We made good money in 2016 and I was asked to submit proof that my estimated income for 2017 would drop to where I reported.  I submitted proof to satisfy them to get approved for paying at the lowest premium and maximum cost sharing subsidies. 

Based on what you said, she probably over reported her income on her ACA marketplace application and if so, upon taxes being filed, she should be getting a tax rebate.


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## rapmarks (Mar 2, 2019)

VacationForever said:


> Did she make much during that calendar year?  If she made very little, then she must not have filled the income question correctly to end up with $900 per month during the 4 months on ACA.  I avoided going to Medicaid and filled out just sufficient to cross then 138% of poverty line to get the maximum subsidies for both premiums and out of pocket, aka cost sharing.  We made good money in 2016 and I was asked to submit proof that my estimated income for 2017 would drop to where I reported.  I submitted proof to satisfy them to get approved for paying at the lowest premium and maximum cost sharing subsidies.
> 
> Based on what you said, she probably over reported her income on her ACA marketplace application and if so, upon taxes being filed, she should be getting a tax rebate.


 wasn’t  actually on aca, and when she was let go in 2017 she received a lump sum and I think they asked her2017 income, which was higher than usual


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## VacationForever (Mar 2, 2019)

rapmarks said:


> System actually on aca, and when she was let go in 2017 she received a lump sum and I think they asked her 2017 income


There is also a question as to whether there is a change in income in 2018.  She should have answered yes and put in her 2018 estimated income.  ACA would have then asked her to submit document to show it.  If she skipped the question in 2018, indicating that there was no change, that would have been how she ended up paying $900 per month in insurance premium.  She should get a rebate if so.


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## DavidnRobin (Mar 2, 2019)

rapmarks said:


> That is my concern/hope that the amt will be less.  Waiting for last broker statement



Under most circumstances it should be less. AMT is such a Blackbox for most - especially how it factors in for previous and future tax rates.

Overall - the tax rates have lowered (for most) since the tax rates decreased.  The side missing us that the benefit is larger for those with more ‘wealth ‘. 

Sure, low income folks do well tax-rate wise - but their savings are smaller compared to higher-wealth individuals since there is a base poverty rate and money is more valuable to them (this is not political - this is math - Emin modeling with poverty level as the base) as their are basic necessities to live (vs owning timeshares... etc). 

What irks me is the comparison to last years ‘refunds’ in media coverage. When it should be overall tax rate.
Nobody managing their money well should get a refund - they should strive to break even (maximizing their tax rates) or owe without penalty.
I never understood this mentality- probably why so many have debt, or haven’t saved adequately.
IMO


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## Steve Fatula (Mar 2, 2019)

DavidnRobin said:


> It is generally a wash.



Not seen anyone who got a wash. The folks I know, not in coastal states with SALT issues, all paid less. Quite a bit less.

The Tax Policy center says about 2/3 of Americans will pay less tax, and ~10% pay more. Note, this has *nothing* to do with refunds or owing. That is a separate issue, I've seen many articles confuse the difference.


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## bogey21 (Mar 2, 2019)

DavidnRobin said:


> Are you writing off your donations, or donating w/o the Deduction?
> Probably the former...



Both.  I write off one big one and don't bother with all the others...

George


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## DavidnRobin (Mar 2, 2019)

bogey21 said:


> Both.  I write off one big one and don't bother with all the others...
> 
> George



We have donated about half our stuff since Sept (sold home - downsizing) - MKondo would be sparkling with joy...

Looks like you are taking it then.
This is last donation write-off we have moving forward...
Good timing.
Now onto Tax Harvesting and Income Transition (converting IRA to Roth to take advantage of Tax Valley... the 12% to 22% tax rate jump, etc).

Bottom-line.
People within StdDed receive no tax benefit from donations (as previous - now just more in this category with new TaxAct).

People Itemizing Deductions do receive tax benefit from donations (regardless if they choose to or not)

People who use StdDed are generally in lower income group - and visa versa.











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## VacationForever (Mar 2, 2019)

DavidnRobin said:


> People who use StdDed are generally in lower income group - and visa versa.
> 
> Sent from my iPhone using Tapatalk



How do you draw this conclusion?


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## Talent312 (Mar 2, 2019)

_Just for the heck of it..._
I just ran my taxes on Credit Karma's website. 
I found it a bit short on hand-holding, but was comprehensive.
Unlike TaxAct + TurboTax, it's free, even for "deluxe" returns.
I could download + print a real return for -0-.

More importantly, it had the same result as TaxAct + TurboTax.
So, it's calculations seem to be accurate.

I haven't decided which I'll use to e-file... prolly TaxAct by habit.
.


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## HitchHiker71 (Mar 2, 2019)

Talent312 said:


> _Just for the heck of it..._
> I just ran my taxes on Credit Karma's website.
> I found it a bit short on hand-holding, but was comprehensive.
> Unlike TaxAct + TurboTax, it's free, even for "deluxe" returns.
> ...



I tried CreditKarma vs Taxcut HR Block which I’ve used for several years now.  CK did not handle rental properties nor small businesses very well IME.  It’s probably just fine for folks who aren’t running multiple income streams though as it covered the normal W2 income streams just fine.

I’m in one of the SALT states in the northeast and took a fairly big hit on our itemized deductions as a result.  Lost about 11k of deductions due to the 10K cap in place.  In 2017 we owed about 2k, this year we owe about 8k - though we also had about 15k additional income year over year.  I compared the taxes due between years and it came up to about 4.2k more for 2017 vs 2018.  Our net taxable income was quite a bit higher due to the SALT cap this year - this was the single largest differentiator.  

I just lowered my withholding allowance and upped my wife’s 401k contributions by quite a bit to both increase tax withholding and to decrease our net income for next year.  Hopefully this will level out our taxes due next year.  

At least we don’t owe state taxes this year - getting a small refund from state.


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## SmithOp (Mar 2, 2019)

rapmarks said:


> She was told by agent that she would see on her income taxes where to get the rebate when filing taxes, and my sister went with her to ask the agent.  She had cobra for eight months and a nine hundred a month plan with a big deductible for four months.



I think there is some confusion here between HCTC and PTC, they are not the same thing.  Sounds like she had both and will need 2 forms.

HCTC is resolved when completing taxes using form 8885.
https://www.irs.gov/credits-deductions/individuals/hctc

PTC is resolved when completing taxes using form 8962.
https://www.irs.gov/forms-pubs/about-form-8962


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## VacationForever (Mar 2, 2019)

When you use Turbo Tax it should prompt you along for ACA Premium Tax Credit etc.  I did that for 2017 returns and thought it was very straight forward.


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## lovetotravel77 (Mar 3, 2019)

First time in 36 years taking the standard deduction. We paid off our mortageand  the SALT limitation of $10K is really hurting people in high income and real estate states, especially in the tri state area. There truthfully is no incentive to home ownership anymore, other than hoping for appreciation. When we downsize, we will rent and see how we like being tenants and leaving the "headaches" to the landlord.


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## rapmarks (Mar 3, 2019)

SmithOp said:


> I think there is some confusion here between HCTC and PTC, they are not the same thing.  Sounds like she had both and will need 2 forms.
> 
> HCTC is resolved when completing taxes using form 8885.
> https://www.irs.gov/credits-deductions/individuals/hctc
> ...


Thanks for the links but I am confused as to which she should use.   She paid for cobra first eight months and the other plan for four months.  The PTC never came up or I incorrectly answered a question.  I believe the only form she received was for the four months, she says she never received anything from cobra.  This is compounded by her not sending me all her paperwork and not even knowing what she should give me.


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## SmithOp (Mar 3, 2019)

rapmarks said:


> Thanks for the links but I am confused as to which she should use.   She paid for cobra first eight months and the other plan for four months.  The PTC never came up or I incorrectly answered a question.  I believe the only form she received was for the four months, she says she never received anything from cobra.  This is compounded by her not sending me all her paperwork and not even knowing what she should give me.



The COBRA may qualify her for HCTC if she meets the requirements.  No form is sent, she has to provide you with her own records for COBRA payments.

If the other plan was purchased through the Affordable Care Marketplace she would have received a 1095-A, those numbers are used to complete the 8962.  The IRS has the 1095-A data and if her return is filed without an 8962 she will get a letter from IRS to submit the form before any refund is paid.


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## rapmarks (Mar 3, 2019)

She received 1095b that she told me about so I was incorrect to take the form 8885 health care tax credit. How would I find the ptc and what would I need to get that credit


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## HitchHiker71 (Mar 3, 2019)

lovetotravel77 said:


> First time in 36 years taking the standard deduction. We paid off our mortageand  the SALT limitation of $10K is really hurting people in high income and real estate states, especially in the tri state area. There truthfully is no incentive to home ownership anymore, other than hoping for appreciation. When we downsize, we will rent and see how we like being tenants and leaving the "headaches" to the landlord.



We still itemized this year but interestingly enough with the 10K SALT cap our itemized deductions fell to just over the 24k mark, so I anticipate next year it actually come in under 24k given we will have less mortgage interest to deduct each year, unless something happens with the tax laws to change the SALT cap.  

This means next year we will most likely take the standard deduction all things being equal.  This also means the mortgage interest deduction is no longer of any real tax value for us and I suspect for many others as well.  This would appear to deemphasize home ownership yes?  

It will be interesting to see how the new tax law impacts home ownership.  Mortgage app volumes have fallen quite a bit over the past year, I’m thinking this may have something to do with it.

We have considered focusing on paying off our mortgage over the next several years even before finalizing our taxes this year.  Why pay all that interest if there’s no tax advantage left now?  Our mortgage is at 3.75% fixed 30 year so our rate is really low and we should easily be able to beat that if we invested the monies from a ROR standpoint.  That said we would be saving a ton on interest payments over time and recovering a significant amount of money into our monthly budget without any mortgage payment.

Or do we simply pay down the existing mortgage now and refinance the remaining balance to lower our payment significantly?  We could refi the remaining balance over 15 years at the same rate we have now and still have a much lower payment than we do today.  I need to run the numbers to determine how to proceed.  Lots of options.



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## VacationForever (Mar 3, 2019)

HitchHiker71 said:


> We still itemized this year but interestingly enough with the 10K SALT cap our itemized deductions fell to just over the 24k mark, so I anticipate next year it actually come in under 24k given we will have less mortgage interest to deduct each year, unless something happens with the tax laws to change the SALT cap.
> 
> This means next year we will most likely take the standard deduction all things being equal.  This also means the mortgage interest deduction is no longer of any real tax value for us and I suspect for many others as well.  This would appear to deemphasize home ownership yes?
> 
> ...


We are firm believers of having no debt so we always try to not take a loan, whether in buying a car or a house.  We feel that the new Tax law negatively affects the upper middle income.  For most of us, we benefit from the new tax law.


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## DavidnRobin (Mar 3, 2019)

If you are into AMT - the $10K SALT limit is not as impactful.


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## HitchHiker71 (Mar 3, 2019)

VacationForever said:


> We are firm believers of having no debt so we always try to not take a loan, whether in buying a car or a house.  We feel that the new Tax law negatively affects the upper middle income.  For most of us, we benefit from the new tax law.



That’s always a good ideal to take and I agree in principle.  Unfortunately on the coasts with our inflated real estate prices most everyone would never own a home at all as it would take decades to save that kind of money to pay in full.  Meanwhile our rent prices are increasing significantly which makes it difficult for folks to save for a home at the same time.  As a rental property owner we have increased our rent on our units over the past several years by over 25% easily while enjoying all time lows on interest rates which have maximized our rental unit income potentials.  In some ways I really feel bad for the millennials as they are stuck living with major financial imbalances with respect to incomes vs expenses.

Based on my experience I would agree with you on the negative affects for the upper middle income earners.  This is mostly due to the SALT cap though.  I suspect there will be debate soon on loosening the SALT caps since the coasts have a ton of influence from a political and lobbying standpoint.


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## Miss Marty (Mar 3, 2019)

How does the SALT Deduction Work?

Under the new plan, taxpayers who _itemize_
will be able to _deduct_ their _state_ _individual
income, sales and property taxes_ up to a
_Limit _of $10,000 in _Total_ starting in 2018.

https://money.cnn.com/2017/12/20/pf/salt-deductions-new-tax-plan/index.html


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## HitchHiker71 (Mar 3, 2019)

Miss Marty said:


> How does the SALT Deduction Work?
> 
> Under the new plan, taxpayers who _itemize_
> will be able to _deduct_ their _state_ _individual
> ...



Very good article, so there’s a marriage penalty involved here:

Married couples get less of a benefit with the new SALT deduction since the limit is the same for both single and married filers.

"This is pretty clearly a marriage penalty," said Faulhaber from Georgetown. "If you have two unmarried taxpayers both paying $10,000 in SALT, they will get an aggregate $20,000 when they file, whereas if they get married they suddenly lose $10,000 in deductions."

If we were able to deduct 20k as a married couple instead of 10K we would not have had a higher tax burden this year when compared to last year.  


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## Steve Fatula (Mar 3, 2019)

HitchHiker71 said:


> If we were able to deduct 20k as a married couple instead of 10K we would not have had a higher tax burden this year when compared to last year.



That is true, but it is also true that we who choose to live in lower tax states, which are generally also poorer states would then be subsidizing you in essence.


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## Sea Six (Mar 3, 2019)

The standard deduction is now so high there is no motivation to carry a mortgage or make charitable donations.  We don't even have a state income tax.  I haven't taken the standard deduction since I was in my early 20's.


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## SmithOp (Mar 3, 2019)

rapmarks said:


> She received 1095b that she told me about so I was incorrect to take the form 8885 health care tax credit. How would I find the ptc and what would I need to get that credit



Everybody with healthcare gets a 1095b, its just evidence of coverage with the months marked.  There is also a 1095c Offer of Coverage from Employer.

If she purchased Affordable Care a 1095a would have been sent by now, she needs to contact her State office to get a copy.  That data feeds the 8962.  It could be a credit or a penalty, if you estimate low on your income when you sign up for ACA part of the subsidy has to be repaid.  If you estimate high, you get a credit.


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## bluehende (Mar 3, 2019)

Steve Fatula said:


> That is true, but it is also true that we who choose to live in lower tax states, which are generally also poorer states would then be subsidizing you in essence.



The only problem is that those states give much more to the federal government than they get back even with the full deduction.  They have been subsidizing poorer states for a long time and now will subsidize even more.  I come from a large donor state and to say that poor states have been subsidizing us because we could deduct our state taxes is just dead wrong.


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## rapmarks (Mar 3, 2019)

SmithOp said:


> Everybody with healthcare gets a 1095b, its just evidence of coverage with the months marked.  There is also a 1095c Offer of Coverage from Employer.
> 
> If she purchased Affordable Care a 1095a would have been sent by now, she needs to contact her State office to get a copy.  That data feeds the 8962.  It could be a credit or a penalty, if you estimate low on your income when you sign up for ACA part of the subsidy has to be repaid.  If you estimate high, you get a credit.
> 
> ...


She did not sign up for aca.   As her cobra was nearing an end, she and my sister, who was helping her, called many agents and most never returned her call.  They finally met with an agent, and I don’t know why, but he said to take this plan and when she filed income tax, she would get part of her premiums back because she was low income. In 2018 she lived on her savings, no income.


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## HitchHiker71 (Mar 3, 2019)

Steve Fatula said:


> That is true, but it is also true that we who choose to live in lower tax states, which are generally also poorer states would then be subsidizing you in essence.



Bigger picture yes this was partly the rationale used for the cap that was put in place - though that’s really just media alternative facts in all honesty.  I disagree about the marriage penalty aspect.  If two people living together that aren’t married and therefore file separately they will in reality have a 20k SALT cap.  The same married couple with the exact same incomes filing jointly will only have 10K.  That is clearly a marriage penalty in my view and nothing to do with subsiding poorer states.  


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## rapmarks (Mar 3, 2019)

SmithOp said:


> Everybody with healthcare gets a 1095b, its just evidence of coverage with the months marked.  There is also a 1095c Offer of Coverage from Employer.
> 
> If she purchased Affordable Care a 1095a would have been sent by now, she needs to contact her State office to get a copy.  That data feeds the 8962.  It could be a credit or a penalty, if you estimate low on your income when you sign up for ACA part of the subsidy has to be repaid.  If you estimate high, you get a credit.
> 
> ...


Ok I filled out the part for the health coverage tax credit, but I am afraid I should not have.  My sister has learning disabilities and only sent me part of the information.  When I called her I asked her if she got a letter about the health coverage tax credit and she said yes,  I am afraid she confused the 1095b with that.   
What my other sister said is the agent wanted her to apply for Medicare and they said no because she had more than two thousand dollars. I think this was an incorrect assumption. The agent would not help her get anACA policy,but got her a marketplace policy,   He said when she did her taxes, she would see where to get the credit.


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## VacationForever (Mar 3, 2019)

rapmarks said:


> Ok I filled out the part for the health coverage tax credit, but I am afraid I should not have.  My sister has learning disabilities and only sent me part of the information.  When I called her I asked her if she got a letter about the health coverage tax credit and she said yes,  I am afraid she confused the 1095b with that.
> What my other sister said is the agent wanted her to apply for Medicare and they said no because she had more than two thousand dollars. I think this was an incorrect assumption. The agent would not help her get anACA policy,but got her a marketplace policy,   He said when she did her taxes, she would see where to get the credit.



I think you are confusing various terms.  ACA policy = marketplace policy.  Only ACA/marketplace policies can get premium refund if she overpaid due to estimating too high an income.  If she bought a private individual policy through the agent, sorry she is out of luck.  She will not get any refund when filing her taxes.  Agents don't sell ACA/Marketplace policies because if they don't get certified as ACA Navigators to sell them, they get no commission.  Only ACA Navigators as they are called, get paid and I don't know if it is a fixed salary or some sort of commission.

I think when you said Medicare, you meant Medicaid.  If she made less than 138% of poverty level in 2018, she should have gone through ACA website which would have then redirected her application to Medicaid which would have meant that her health insurance would have been free.  Under ACA, Medicaid qualification does not look at assets, only income.  I could have even qualified for Medicaid in 2017 because we made no money that year.  I steered clear of Medicaid because of poor doctor network.


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## Steve Fatula (Mar 3, 2019)

bluehende said:


> The only problem is that those states give much more to the federal government than they get back even with the full deduction.  They have been subsidizing poorer states for a long time and now will subsidize even more.  I come from a large donor state and to say that poor states have been subsidizing us because we could deduct our state taxes is just dead wrong.



I agree with you, but it is subsidizing for the purpose of SALT in isolation. There are many aspects to the tax code, some go many ways. In general, I don't like any deductions as those tend to favor better off people. My state is a donor state, more than most donor states (such as CA). I feel the code has been wrong all along allowing deductions for expensive houses. Yes, it is painful now to remove it (partially), but, for me, correct thing to do. There will always be donor and taker states, though measuring donor vs taker is not as simple as some make it seem, there are industries involved that provide indirect benefits and all sorts of complex reaches of the govt. That in itself is not unfair as it's a federal system. The tax code is progressive, the more you make, presumably the more you pay (higher tax bracket) but we all know it doesn't work that way, all those deductions (I tend to rename them loopholes, yes, I know they are technically not) skew the tax bracket vs what people actually pay. The brackets are intended to make people worse off not pay as much, so, of course poorer states in general may get back more than they give. Though not in my state. At least if you believe the numbers quoted in various studies, but those studies only skim the surface of the data too. I will agree to disagree on SALT.

I do agree though that as is with the current rules and limits, there should not be a marriage penalty.


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## rapmarks (Mar 3, 2019)

VacationForever said:


> I think you are confusing various terms.  ACA policy = marketplace policy.  Only ACA/marketplace policies can get premium refund if she overpaid due to estimating too high an income.  If she bought a private individual policy through the agent, sorry she is out of luck.  She will not get any refund when filing her taxes.  Agents don't sell ACA/Marketplace policies because if they don't get certified as ACA Navigators to sell them, they get no commission.  Only ACA Navigators as they are called, get paid and I don't know if it is a fixed salary or some sort of commission.
> 
> I think when you said Medicare, you meant Medicaid.  If she made less than 138% of poverty level in 2018, she should have gone through ACA website which would then redirect her application to Medicaid which would have meant that her health insurance would have been free.  Under ACA, Medicaid qualification does not look at assets, only income.  I could have even qualified for Medicaid in 2017 because we made no money.  I steered clear of Medicaid because of poor doctor network.[/QUOTE
> 
> Ok, you are right I meant Medicaid.  The broker said she would not qualify for Medicaid, it is a marketplace policy, so we need to contact the agent and see about getting the form 1095a. Or I need to amend return and remove the credit


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## VacationForever (Mar 3, 2019)

@rapmarks Can you re-read what I posted?  Marketplace policy = ACA policy.  If her agent sold her a private individual policy, it is not a marketplace policy.  Agents do NOT sell marketplace policies.  Only Navigators provide that guidance.

Also since she received 1095b, it tells me that she had a private individual health insurance policy, not an ACA/Marketplace policy.  If it is an ACA/Marketplace policy, 1095a is sent directly by ACA.


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## bluehende (Mar 3, 2019)

Steve Fatula said:


> I agree with you, but it is subsidizing for the purpose of SALT in isolation. There are many aspects to the tax code, some go many ways. In general, I don't like any deductions as those tend to favor better off people. My state is a donor state, more than most donor states (such as CA). I feel the code has been wrong all along allowing deductions for expensive houses. Yes, it is painful now to remove it (partially), but, for me, correct thing to do. There will always be donor and taker states, though measuring donor vs taker is not as simple as some make it seem, there are industries involved that provide indirect benefits and all sorts of complex reaches of the govt. That in itself is not unfair as it's a federal system. The tax code is progressive, the more you make, presumably the more you pay (higher tax bracket) but we all know it doesn't work that way, all those deductions (I tend to rename them loopholes, yes, I know they are technically not) skew the tax bracket vs what people actually pay. The brackets are intended to make people worse off not pay as much, so, of course poorer states in general may get back more than they give. Though not in my state. At least if you believe the numbers quoted in various studies, but those studies only skim the surface of the data too. I will agree to disagree on SALT.
> 
> I do agree though that as is with the current rules and limits, there should not be a marriage penalty.



I want to point out that I did not take a side on the issue you want to agree to disagree.  I believe rich states do have an obligation to help poorer states and have no problem with the salt limitations.  I only wanted to point out that the idea that some how poor states are subsidizing high tax states is false.  There are a ton of reasons why a state would be a donor or a taker state but the correlation is pretty strong.  It is kind of a pet peeve of mine since our state gets the least back.  I actually again have no problem with it, but get annoyed when getting 1/14th per dollar back than the biggest taker state we somehow are portrayed as being subsidized.


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## DavidnRobin (Mar 3, 2019)

Here are some slides on the Tax Act that some may find interesting. These were from a Tax Harvesting Seminar - I cut out name of Company as not to appear to be promoting them.





















Also the Business Tax Change of a 20% Deduction for pass-through businesses (limited).

And the Estate & Gift Tax Law Changes of DOUBLING the Estate and Gift Tax exemptions and GST to 11.4M per individual.

Yep... the Tax Act really helps those lower and middle income  families with >$20M estates {sarcasm alert!}




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## bogey21 (Mar 3, 2019)

Steve Fatula said:


> In general, I don't like any deductions as those tend to favor better off people...



Even though I itemize and personally benefit from deductions I'm not opposed to doing away with *ALL *(not just some) of them but I don't think it will ever happen.  It would make my life simpler and I like simplicity...

George


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## rapmarks (Mar 3, 2019)

VacationForever said:


> Can you re-read what I posted?  Marketplace policy = ACA policy.  If her agent sold her a private individual policy, it is not a marketplace policy.  Agents do NOT sell marketplace policies.  Only Navigators provide that guidance.


Yes, your post clarified everything for me.  I thought they went to a navigator who got them a marketplace policy, but we will find out for sure when they reach him.   My sisters are in Illinois and I am in Florida


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## VacationForever (Mar 3, 2019)

rapmarks said:


> Yes, your post clarified everything for me.  I thought they went to a navigator who got them a marketplace policy, but we will find out for sure when they reach him.   My sisters are in Illinois and I am in Florida


1095b is for private individual insurance.  1095a is sent out directly by ACA.

If she made something like less than 16K for the year, she would have qualified for Medicaid under ACA.


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## rapmarks (Mar 3, 2019)

DavidnRobin said:


> Here are some slides on the Tax Act that some may find interesting. These were from a Tax Harvesting Seminar - I cut out name of Company as not to appear to be promoting them.
> 
> 
> 
> ...


Regarding business tax change,  I have one rental property, can’t claim a loss because of income limitation, not sure


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## rapmarks (Mar 3, 2019)

VacationForever said:


> 1095b is for private individual insurance.  1095a is sent out directly by ACA.
> 
> If she made something like less than 16K for the year, she would have qualified for Medicaid under ACA.


So then it sounds like she didn’t get a marketplace policy, too bad


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## VacationForever (Mar 3, 2019)

rapmarks said:


> So then it sounds like she didn’t get a marketplace policy, too bad


Going through ACA/Marketplace Exchange is the default for folks needing individual insurance.  I am surprised that your sisters did not think of using that as the first option.  They did not get call back from other insurance brokers because there is no money for them to advise them to go through ACA.  The broker who sold your sister the plan did it right by advising her to go to ACA to get Medicaid but then your sisters failed to understand that ACA Medicaid rules are different from traditional Medicaid.  What the broker did wrongly was to then sell your sister a private insurance plan and told her that she would get a refund.  He was either ignorant or deliberately lying.


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## VacationForever (Mar 3, 2019)

@rapmarks Here's a link to explain Premium Tax Credit. 
https://www.healthcare.gov/glossary/premium-tax-credit/

https://www.irs.gov/affordable-care-act/individuals-and-families/the-premium-tax-credit-the-basics


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## rapmarks (Mar 4, 2019)

VacationForever said:


> Going through ACA/Marketplace Exchange is the default for folks needing individual insurance.  I am surprised that your sisters did not think of using that as the first option.  They did not get call back from other insurance brokers because there is no money for them to advise them to go through ACA.  The broker who sold your sister the plan did it right by advising her to go to ACA to get Medicaid but then your sisters failed to understand that ACA Medicaid rules are different from traditional Medicaid.  What the broker did wrongly was to then sell your sister a private insurance plan and told her that she would get a refund.  He was either ignorant or deliberately lying.


Sounds like it.  My sister said navigators only work during the time in the fall when people can change plans.


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## lovetotravel77 (Mar 4, 2019)

SO LOOKING FORWARD to downsizing and our move to Fl, no state income tax, much lower real estate taxes, and no Florida estate taxes!


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## HitchHiker71 (Mar 4, 2019)

lovetotravel77 said:


> SO LOOKING FORWARD to downsizing and our move to Fl, no state income tax, much lower real estate taxes, and no Florida estate taxes!



I must admit as much as I don’t like the hot weather, we are considering relocating to FL for the same reasons.


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## AnnaS (Mar 4, 2019)

Miss Marty said:


> *~ The Tax Cuts and Jobs Act ~
> 
> How Will the Recent IRS Tax Law
> Changes Affect You ?  (Highlights)
> ...




We have been taking the standard deduction for years since our mortgage was paid off.  

We still owe $$$ - and pay a small penalty - but compared to last year, we owe almost $500 less.


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## VacationForever (Mar 4, 2019)

rapmarks said:


> Sounds like it.  My sister said navigators only work during the time in the fall when people can change plans.


The thing is that the website is pretty easy to use and it is available around the year for change of life events like your sister's.  It literally walks you through step by step. I hate to deal with human beings and prefer to do everything online.


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## carl2591 (Mar 4, 2019)

interesting comment.. this morning on CNBC there was talk about the refunds that were coming back.. JP Morgan has done studies that suggest some 29% of tax payers get the equivalent of 6 month salary as a tax refund each year.. 6 months.. 

WHen i heard that i just had to shout at the TV.. "What a bunch of dumb @ss they are!!!"  I am not going to give the government a interest free loan if at all possible.. I like to have a balance due of less than a 1000 bucks..  

Too many people use the tax return as a saving account which is dumb way to do it. The report was also saying credit card balances usually dropped during feb and mar as tax money started coming back to folks. What is so "dumb" about that is the credit card balance that is being paid off by the interest free loan, is being charge a HIGH rate of interest over the year. They loose ground every with this method of operation..  

It no wonder 50% of american don't have enough saving to deal with a 1000 dollar issue that might come up like car repair, new water heater etc.  More financial classes need to be taught in HS at a min..  

I used to listen to Dave Ramsey and he would have folks on that paid off large sums of debt and gave a " WERE DEBT FREEEEEE" ... scream on the radio..   it was fun to hear 



bluehende said:


> I worry a bit about penalties as I do not like to have the government hold my money interest free.  That is easily taken care of as long as you have as much with held this year as you owed last year.  I also like to manage a bit more.  I see a potential tax problem (good to have) when I have to start taking out of my retirement accounts and the long term capital gains I am sitting on.


a


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## bluehende (Mar 4, 2019)

carl2591 said:


> interesting comment.. this morning on CNBC there was talk about the refunds that were coming back.. JP Morgan has done studies that suggest some 29% of tax payers get the equivalent of 6 month salary as a tax refund each year.. 6 months..
> 
> WHen i heard that i just had to shout at the TV.. "What a bunch of dumb @ss they are!!!"  I am not going to give the government a interest free loan if at all possible.. I like to have a balance due of less than a 1000 bucks..
> 
> ...



Getting 6 months of pay back is virtually impossible.  That would mean taking out 50% of your entire salary more than you you owe.  Add in deductions for real federal  then add SS and local taxes then take out 401k and your share of benefits and you many would have to pay them to work.  Not a chance that number is accurate.


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## carl2591 (Mar 4, 2019)

just checked and it was 6 weeks.. not 6 months.. yes that would be interesting.. my bad   

https://www.cnbc.com/video/2019/03/...erican-families.html?&qsearchterm=tax refunds



bluehende said:


> Getting 6 months of pay back is virtually impossible.  That would mean taking out 50% of your entire salary more than you you owe.  Add in deductions for real federal  then add SS and local taxes then take out 401k and your share of benefits and you many would have to pay them to work.  Not a chance that number is accurate.


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## Steve Fatula (Mar 5, 2019)

lovetotravel77 said:


> SO LOOKING FORWARD to downsizing and our move to Fl, no state income tax, much lower real estate taxes, and no Florida estate taxes!



Well, the no state tax not always very important once retired. I doubt we will ever pay state taxes now that I am retired, and, we do have a state tax. Real estate taxes, now that does matter when retired, and it's why we moved out of Texas. Great state to live and work in as there are so many good jobs, just would never retire there due to property tax. In my state, they are frozen once retired and you meet certain criteria, which we do. A great benefit as they are low already.

Downsizing I love!



carl2591 said:


> WHen i heard that i just had to shout at the TV.. "What a bunch of dumb @ss they are!!!"  I am not going to give the government a interest free loan if at all possible.. I like to have a balance due of less than a 1000 bucks..
> 
> Too many people use the tax return as a saving account which is dumb way to do it.



Well, technically true. Some cannot manage money well, so, it does work for them, known many of them and while not the best financially, still I can see why they do it (you'd have to know them). Having a balance due (ideal) means instead of loaning the govt interest free, you are taking a loan interest free, which sounds good to me! I do totally agree with you. It's been hard for us to make it come out the last few years due to widely fluctuating (and non predictable) pre-retirement and post retirement incomes (and, wildly fluctuating dividends vs return of capital), but we should have smooth sailing from now on.

Over the past 15-20 years, I was rarely able to make it come out perfectly and owe enough as desired. I always tried to owe a little. Something would always happen, a year end bonus, whatever. But it was surprising to see how many years my fed tax owed or due was within $100 of my prediction (estimated taxes paid)!


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## VacationForever (Mar 5, 2019)

Steve Fatula said:


> Well, technically true. Some cannot manage money well, so, it does work for them, known many of them and while not the best financially, still I can see why they do it (you'd have to know them). Having a balance due (ideal) means instead of loaning the govt interest free, you are taking a loan interest free, which sounds good to me! I do totally agree with you. It's been hard for us to make it come out the last few years due to widely fluctuating (and non predictable) pre-retirement and post retirement incomes (and, wildly fluctuating dividends vs return of capital), but we should have smooth sailing from now on.
> 
> Over the past 15-20 years, I was rarely able to make it come out perfectly and owe enough as desired. I always tried to owe a little. Something would always happen, a year end bonus, whatever. But it was surprising to see how many years my fed tax owed or due was within $100 of my prediction (estimated taxes paid)!


One year I sold a property overseas and since I always play by the rules I reported the large capital gain.  I sold my property earlier in the year and that same year California votes passed the "millionaire" tax bill that was retroactive for the year.  I owed about $250K between Federal and State income tax on that property.  Friends called me stupid. I said I could sleep and not worry about IRS knocking on my door.  We are glad never to need to pay state income tax again.  My son wants me to move back to California and stay with him if my husband goes before me and I will have to think really hard on that.  My goal will be to convince him to move in with me.


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## Steve Fatula (Mar 5, 2019)

VacationForever said:


> One year I sold a property overseas and since I always play by the rules I reported the large capital gain.  I sold my property earlier in the year and that same year California votes passed the "millionaire" tax bill that was retroactive for the year.  I owed about $250K between Federal and State income tax on that property.  Friends called me stupid. I said I could sleep and not worry about IRS knocking on my door.  We are glad never to need to pay state income tax again.  My son wants me to move back to California and stay with him if my husband goes before me and I will have to think really hard on that.  My goal will be to convince him to move in with me.



Wow, that's a *lot*! I would call you honest, not stupid. Definitely convince him! Some of the things like changed laws are outside of our control, however, for state taxes, you can always move which you did. Kudos!

Yes, very happy with not paying state taxes as well. And low property taxes too. Well, we're in the middle property tax rate wise, but once you combine property values and rate (since houses are cheaper for the same house), we're 9th lowest. i.e., Nevada has lower raw rates than us, but we still pay less for the same house. Sometimes, people miss that it's the combination that counts, but I *know* you don't. You are financially saavy! Allows me to do many more things than I otherwise would be able to. As a mid country guy, it's always hard to fathom the money people pay in other states. Not saying they are wrong, they may love where they are, make enough, etc.. I am just trying to say the amount of money is amazing to me. Can't relate. That tax you paid is more than my house value!


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## Miss Marty (Mar 5, 2019)

*Health Coverage & Your Federal Taxes*

https://www.healthcare.gov/taxes/
*
No health insurance? 
See if you'll owe a fee
*
For plan years through 2018,
if you can afford health insurance _but choose not to buy it_, you may
owe/pay a fee called the individual "Shared Responsibility Payment".
(The fee is sometimes called the "penalty," "fine," or "individual mandate.")

Starting with the 2019 plan year (for which you’ll file taxes in April 2020),
the Shared Responsibility Payment no longer applies.


*Find out if the Premium Tax Credit can benefit you*

The premium tax credit helps eligible individuals and families cover the premiums for insurance purchased through the Health Insurance Marketplace. You can choose to have all, some, or none of your estimated credit paid directly to your insurance company throughout the year.


*Form 8962 - Premium Tax Credit (PTC) *

https://www.irs.gov/pub/irs-pdf/f8962.pdf

*Instructions for Form 8962 (20 page pdf)*

https://www.irs.gov/pub/irs-pdf/i8962.pdf


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## VacationForever (Mar 5, 2019)

Steve Fatula said:


> Wow, that's a *lot*! I would call you honest, not stupid. Definitely convince him! Some of the things like changed laws are outside of our control, however, for state taxes, you can always move which you did. Kudos!
> 
> Yes, very happy with not paying state taxes as well. And low property taxes too. Well, we're in the middle property tax rate wise, but once you combine property values and rate (since houses are cheaper for the same house), we're 9th lowest. i.e., Nevada has lower raw rates than us, but we still pay less for the same house. Sometimes, people miss that it's the combination that counts, but I *know* you don't. You are financially saavy! Allows me to do many more things than I otherwise would be able to. As a mid country guy, it's always hard to fathom the money people pay in other states. Not saying they are wrong, they may love where they are, make enough, etc.. I am just trying to say the amount of money is amazing to me. Can't relate. That tax you paid is more than my house value!


I admire how much you travel, especially that it includes a good amount of international destinations.  I guess everything is relative wrt to cost.  Our overall cost of living is lower than in California but higher than some other states.  At the end of the day, if we are mobile and not tied down to one location because of family or other reasons, then we all can choose where we live based on environmental, costs, income/assets and maybe even political affiliation reasons.  We love where we now live and cannot imagine living anywhere else.


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## Steve Fatula (Mar 5, 2019)

VacationForever said:


> I admire how much you travel, especially that it includes a good amount of international destinations.  I guess everything is relative wrt to cost.  Our overall cost of living is lower than in California but higher than some other states.  At the end of the day, if we are mobile and not be tied down to one location because of family or other reasons, then we all can choose where we live based on environmental, costs, income/assets and maybe even political affiliation reasons.  We love where we now live and cannot imagine living anywhere else.



Totally agree. Everyone has different criteria. That’s why its good there are 50 states!


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## DavidnRobin (Mar 5, 2019)

Totally agree.
We live in one of costliest areas (Silicon Valley) that exists, but I accounted for our living costs (incl CA State Taxes) in the calculation of our Retirement Spend for well into our future.  When/If we leave? Gravy...

Yep, our money could go further in probably >99% other places - but that would not be here - and it is not always about money. And for this part in our lives (and necessity) - it is great
(sans insane traffic, but we drive infrequently and transit station is 4 min walk).
Life is Good.
 




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## Miss Marty (Mar 5, 2019)

*VacationForever*

I owed about *$250K *between Federal and State income tax on that property.


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## VacationForever (Mar 5, 2019)

Miss Marty said:


> *VacationForever*
> 
> I owed about *$250K *between Federal and State income tax on that property.


Sorry, I missed your post.  Did you also sell a property?  Mine was overseas which I bought way before coming to the US.  I guess I could have hid the sale and slowly brought the money back.  But I didn't want to cheat the system, no matter how unfair I felt it was.  I sold it when I decided that I was not going to move back and get citizenship here instead.


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## HitchHiker71 (Mar 5, 2019)

Miss Marty said:


> *VacationForever*
> 
> I owed about *$250K *between Federal and State income tax on that property.



Did you have to pay in-country taxes on that as well?  Or does that 250k include taxes from both countries?  


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## VacationForever (Mar 5, 2019)

HitchHiker71 said:


> Did you have to pay in-country taxes on that as well?  Or does that 250k include taxes from both countries?
> 
> 
> Sent from my iPhone using Tapatalk


Are you asking me?  I paid no taxes overseas.  It is a country that does not tax capital gains.


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