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A Guide to the Tax Changes

Discussion in 'TUG Lounge' started by MULTIZ321, Dec 30, 2017.

  1. ace2000

    ace2000 TUG Member

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    And I'm sure since your local "fishwrapper" says it, it HAS to be true, and there's absolutely no way that they could be distorting or exaggerating anything to sell more papers or views??? Naw... it has to be true. Nevermind, how could I even think such a thing. :)
     
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  2. MULTIZ321

    MULTIZ321 TUG Member

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    Hi Ace,

    Don't tell me you're going over to the Fake News Camp.

    Richard
     
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  3. ace2000

    ace2000 TUG Member

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    Of course not, I'm still kicking myself for even thinking such a thing. Sometimes my worst thoughts just get the better of me... :)
     
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  4. bluehende

    bluehende TUG Review Crew: Veteran TUG Member

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    I read the article. It was saying that the new tax bill will change the amounts of state taxes if state tax laws stay as they are. The tax man in Idaho was saying if nothing else changes Idaho residents would pay 97 million more in state taxes. The interesting thing is that the new federal tax law takes effect mid fiscal year for Idaho complicating what they can do.
     
  5. PigsDad

    PigsDad TUG Member

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    Well, if an Idaho resident's income tax is calculated similar to Colorado (based on form 1040 line 43: Federal Taxable Income), that would make sense. Because of the general reduction of deductions, exemptions, etc., a lot of taxpayer's Taxable Income will go up. But their Federal income tax will be less in most cases because of changes to the tax brackets and rates. I think it will be interesting for a lot of states.

    However, getting back to the newspaper headline: Sure, the tax bill may cost Idahoans $97 million more (as a whole) in state taxes, I would bet they will be saving way more than that in Federal taxes (as a whole). But that headline probably wouldn't sell newspapers... :doh:

    Kurt
     
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  6. CalGalTraveler

    CalGalTraveler TUG Member

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    There is a mode of thought that says that the best legacy you can leave your children is their education, and for their retired parents to be self-sufficient. Any inheritance they receive beyond that is unexpected gravy.

    With rising college, tax, and healthcare costs, this will certainly be the case!
     
    Last edited: Jan 8, 2018
  7. isisdave

    isisdave TUG Member

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    The effect on state taxes is something I have not seen discussed anywhere until this thread. There is bound to be some really negative consequences for states that base their tax on the federal Taxable Income line, which is AFTER deductions and (formerly) exemptions. Hence, if taxable income goes down because of the doubling of SD (for example, for retired couples with no kids), they're going to collect less tax.

    Here in California, taxes start with federal Adjusted Gross Income, tweaked for things that are or aren't taxable in CA (mostly SS isn't taxed, and state taxes aren't deductible). Then the generous Standard Deduction ($8472 for couples) is applied. We have an "exemption" of $114 per person, double that for seniors, but it's actually a credit on the calculated tax. So there shouldn't be any significant effect on our tax collections.
     
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  8. mdurette

    mdurette Sighting Expert & TUG Review Crew: Veteran TUG Member

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    Someone once told me....nobody will ever take away your education. So true.

    On an education note and back to the topic if this thread. I just learned today that parents can now withdraw $10,000 per year from their kids 529 college savings plan for private education for grades k-12. It is getting a lot of flack, but personally I'm happy with the option just in case I need it.
     
  9. bobpark56

    bobpark56 TUG Review Crew: Expert TUG Member

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    No. I think that spending issues are a topic for another thread.
     
  10. rapmarks

    rapmarks TUG Review Crew: Elite TUG Member

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    How many yearschavecinheard a baby born before the end of the year a little tax deduction. No longer, now it's a little tax credit.
     
  11. CalGalTraveler

    CalGalTraveler TUG Member

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    Below is an article comparing California and NY to low tax states. Biggest difference appears to be the high cost of living which drives higher wages for teachers, police, fire etc and the bargaining power of the public unions for retirement benefits. Not sure there is much that can be done to manage lower wages of public servants given the high cost of living here. Appears to be systemic problems tied to the cost of living and union negotiations that are not easily solved by cutting budgets - lest we hire fewer teachers and firefighters.

    I would like to see a comparison of overhead percentages between the states which is not included in this report.

    https://www.mercurynews.com/2018/01...s-pay-more-state-and-local-taxes-than-texans/


    upload_2018-1-14_11-31-19.png
     
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  12. VacationForever

    VacationForever Tug Review Crew: Rookie TUG Member

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    The brunt of CA's problem related to collecting more tax money but fewer services is due to increasing contributions to the large underfunded public pension funds from unrealistic expectations of pension investment growth estimates. Unions negotiated nice terms and the state approved them years ago. See Jerry Brown lamenting that in the next round of recession, pension will be on the cutting board.

    http://www.sacbee.com/news/politics-government/the-state-worker/article194434479.html
     
  13. rapmarks

    rapmarks TUG Review Crew: Elite TUG Member

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    Interesting article in New York Times about doubling your charitable donations every other year, taking the year off the next, therefore itemizing every other year.
     
  14. PigsDad

    PigsDad TUG Member

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    We may look into this. Because of the new tax bill, we did accelerate most of our planned 2018 charitable giving into 2017 so we could claim the deduction. With the new tax bill, we will not itemize any more, but if we double-up on charitable giving every-other year, we may benefit by itemizing on those years. I'll have to play with the numbers, but it won't affect us until at least 2019 so I have some time.

    Kurt
     
  15. Roger830

    Roger830 TUG Member

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    When employeed, I did something similar with the property tax. Paid three payments, Jan July Dec, in one year to itemize, then pay only July the next year and take the standard deduction.
     
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  16. bobpark56

    bobpark56 TUG Review Crew: Expert TUG Member

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    It appears that the big nanny / PC states are the ones with the highest costs of living. Folks in live-and-let-live states seem to elect politicians that manage to get along more frugally. Perhaps Ny/Cal etc should try electing politician/parties of the more frugal bent.
     
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  17. VacationForever

    VacationForever Tug Review Crew: Rookie TUG Member

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    The state with the highest poverty level... is California (#1)... NY (#4). https://www.bizjournals.com/sanjose...highest-poverty-rates-calif-fla-la-ny-az.html

    Being more frugal does not help these states. They need fundamental change and if I get into it more it will become political.
     
  18. bobpark56

    bobpark56 TUG Review Crew: Expert TUG Member

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    Tax laws (abetted by local practices) do seem to affect voting by the feet. Here are the current forecasts for the changes in congressional representation we are likely to see in 2020...with Illinois leading in the race to lose 2 congressional seats.:

    [​IMG]
     
  19. Brett

    Brett Guest

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    LOL!!
    just google "The state with the highest poverty level"

    but I suppose there can be a difference of opinion on "poverty level" ... fake news or real
     
  20. klpca

    klpca TUG Review Crew: Veteran TUG Member

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    Circling back to the (long ago) original topic, I had an opportunity yesterday to calculate our taxes for 2018 using the actual brackets. Unlike the result from the calculator, we receive no tax cut, in fact we have an increase (although one I am not going to lose any sleep over). In our case, the calculator linked above was off by over $1,500 so be forewarned and do not use the numbers presented on the calculator when determining your estimated taxes for example. (I'm linking this article strictly for the brackets/rates. I can't vouch for the other content). https://www.fool.com/taxes/2018/01/18/your-complete-guide-to-the-2018-tax-changes.aspx
     
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  21. CalGalTraveler

    CalGalTraveler TUG Member

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    It appears that my earlier prediction here on Tug is happening. California has just introduced a bill to increase corporate taxes on businesses over $1 million in revenue to offset the tax cuts.

    http://www.latimes.com/politics/ess...-pitch-business-tax-1516315691-htmlstory.html

    (Calif. businesses never left the state when taxes were higher, so they probably wouldn't leave with this tax. As someone who will pay thousands in higher taxes with the SALT deduction cap, I am in favor of this if they give relief to our personal SALT deduction loss.)
     
  22. Roger830

    Roger830 TUG Member

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    New taxes generate new spending.

    CT didn't have an income tax until about 25 years ago.
    It was supposed to reduce property tax because of grants to towns.
    Now there is a $2 billion deficit, higher income tax, high property tax, small town grants, and business leaving the state.
     
  23. CalGalTraveler

    CalGalTraveler TUG Member

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    True. My biggest concern is that they will pass this and not give any relief on SALT. I am glad we are within reach of retirement and can work remotely because we may be establishing residency out of state if there is no SALT relief.

    The people in charge in Washington may experience unintended consequences as Californians/NY/NJ etc. flood into low tax states disrupting carefully drawn election districts/electoral votes and adding cost pressure to local infrastructure. Baby boomers retiring and businesses moving out of state with their personnel will add to this tidal wave.

    http://thehill.com/opinion/finance/369536-census-data-show-people-flocking-to-low-tax-states

    As the saying goes...be careful what you wish for...you might just get it!
     
    Last edited: Jan 24, 2018
  24. VacationForever

    VacationForever Tug Review Crew: Rookie TUG Member

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    The taxes raised are supposed to go help the poor and those on welfare. I highly doubt any of the raised taxes would be used to give relief on SALT.
     
  25. fillde

    fillde TUG Member

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