Tax Bill Nixes Deduction for "donation" to buy Tickets . . . .

[Max_Power]

We were talking about this last night. Of course, since no one knew what was in the tax bill, it did not come out until this afternoon...

http://www.espn.com/college-sports/...ege-administrators-worry-funding-new-tax-plan

 

[hdhntr1]

Just add it to know deduction for state and local tax bills and a limit on home interest deductions. Somebody will be getting a break but it won't be the majority of U.S. taxpayers.

This is only dealing with the itemization aspects of the proposed tax plan. Actually only about 30% itemize with the current tax code and that is with the standard deduction being $6300 for individuals and 12,700 for couples. By basically doubling the standard deduction, those that don't itemize will get a big increase in their deductions and many of those that currently itemize would still do better with the higher standard deduction. In fact the vast majority including most in the middle class would end up with more deductions with the higher standard deduction than they do now by itemizing. . Awfully hard for a couple to come up with more than $24K in deductions to justify itemizing and unless they currently have more than that, they would be end up with more deductions with the new standard deduction. For example, a couple with $100 k income (technically at the high end of the middle class) and a $300K home in IL ($260K loan amount at 4% current rate would pay $10.4k in interest and $6000 in property taxes) and would pay about $4500 in state income taxes. They would still need $3K in additional deductions just to get to that $24K figure and anything less and they would likely be be better off under the new rules by not itemizing. If it is a less expensive house, they would need even more. Most anyone that rents would be better off almost regardless of income unless they are high income in a high tax state.

Now those those in the top 5% likely to lose as they are more likely to have more than $24K in deductions under the current system and would lose many of them. For example, a couple with $200K income, $500K house would be paying about $9500 in state income taxes, $10.5K in property taxes and interest of $18K, all currently deductible. They would lose as many of their deductions would be eliminated. But then, by definition, this group is not in the middle class. If they rent, it would be closer to break even as far as deductions are concerned

This is only dealing with itemized deductions aspect of the proposed new structure. If they had stuck with this, it would be a no brainer win for the vast majority, especially the middle class, increasing taxes on high income people and lowering taxes for almost everyone else. But the loss of personal exemptions complicates things.

https://www.forbes.com/sites/anthon...rent-law-and-the-house-proposal/#4b9dfe864425

 

[Alvious]

My first thought was "Who is Bill Nixes?"

 

[corbi296]

This is only dealing with the itemization aspects of the proposed tax plan. Actually only about 30% itemize with the current tax code and that is with the standard deduction being $6300 for individuals and 12,700 for couples. By basically doubling the standard deduction, those that don't itemize will get a big increase in their deductions and many of those that currently itemize would still do better with the higher standard deduction. In fact the vast majority including most in the middle class would end up with more deductions with the higher standard deduction than they do now by itemizing. . Awfully hard for a couple to come up with more than $24K in deductions to justify itemizing and unless they currently have more than that, they would be end up with more deductions with the new standard deduction. For example, a couple with $100 k income (technically at the high end of the middle class) and a $300K home in IL ($260K loan amount at 4% current rate would pay $10.4k in interest and $6000 in property taxes) and would pay about $4500 in state income taxes. They would still need $3K in additional deductions just to get to that $24K figure and anything less and they would likely be be better off under the new rules by not itemizing. If it is a less expensive house, they would need even more. Most anyone that rents would be better off almost regardless of income unless they are high income in a high tax state.

Now those those in the top 5% likely to lose as they are more likely to have more than $24K in deductions under the current system and would lose many of them. For example, a couple with $200K income, $500K house would be paying about $9500 in state income taxes, $10.5K in property taxes and interest of $18K, all currently deductible. They would lose as many of their deductions would be eliminated. But then, by definition, this group is not in the middle class. If they rent, it would be closer to break even as far as deductions are concerned

This is only dealing with itemized deductions aspect of the proposed new structure. If they had stuck with this, it would be a no brainer win for the vast majority, especially the middle class, increasing taxes on high income people and lowering taxes for almost everyone else. But the loss of personal exemptions complicates things.

https://www.forbes.com/sites/anthon...rent-law-and-the-house-proposal/#4b9dfe864425

Why do you keep pushing this arguement?You did so on another thread before another poster reminded you that the $4050 per individual deduction is being eliminated. So a married couple with two or more kids is likely not coming out ahead in this regardless of whether they itemize or not. You keep spewing this arguement and completely ignore this very important detail. Why?

 

[ubercat]

My first thought was "Who is Bill Nixes?"

Don't know offhand. But I agree he should be taxed.

 

[seavue617]

Not a particularly good proposal for seniors living in high tax states who are more likely to own homes (and pay property and income taxes) and have high medical expenses (Medicare and its various parts do not cover even close to everything -zero dental and none of the expensive proprietary drugs). The only benefit is doing away with the AMT.

 

[NJCat]

Not a particularly good proposal for seniors living in high tax states who are more likely to own homes (and pay property and income taxes) and have high medical expenses (Medicare and its various parts do not cover even close to everything -zero dental and none of the expensive proprietary drugs). The only benefit is doing away with the AMT.

You can only deduct medical expenses in excess of 7.5% of your adjusted gross income. The situation you cite probably wouldn't qualify. These hypothetical Seniors either have paid off their home, or have a very low mortgage interest payment if they have lived in that home for most of their lives. They are MUCH better off with a $24,000 standard deduction than itemizing with property taxes of say $12,000/year and state taxes of say 6% of $60,000 taxable income.....

 

[rmndcat]

This is only dealing with the itemization aspects of the proposed tax plan. Actually only about 30% itemize with the current tax code and that is with the standard deduction being $6300 for individuals and 12,700 for couples. By basically doubling the standard deduction, those that don't itemize will get a big increase in their deductions and many of those that currently itemize would still do better with the higher standard deduction. In fact the vast majority including most in the middle class would end up with more deductions with the higher standard deduction than they do now by itemizing. . Awfully hard for a couple to come up with more than $24K in deductions to justify itemizing and unless they currently have more than that, they would be end up with more deductions with the new standard deduction. For example, a couple with $100 k income (technically at the high end of the middle class) and a $300K home in IL ($260K loan amount at 4% current rate would pay $10.4k in interest and $6000 in property taxes) and would pay about $4500 in state income taxes. They would still need $3K in additional deductions just to get to that $24K figure and anything less and they would likely be be better off under the new rules by not itemizing. If it is a less expensive house, they would need even more. Most anyone that rents would be better off almost regardless of income unless they are high income in a high tax state.

Now those those in the top 5% likely to lose as they are more likely to have more than $24K in deductions under the current system and would lose many of them. For example, a couple with $200K income, $500K house would be paying about $9500 in state income taxes, $10.5K in property taxes and interest of $18K, all currently deductible. They would lose as many of their deductions would be eliminated. But then, by definition, this group is not in the middle class. If they rent, it would be closer to break even as far as deductions are concerned

This is only dealing with itemized deductions aspect of the proposed new structure. If they had stuck with this, it would be a no brainer win for the vast majority, especially the middle class, increasing taxes on high income people and lowering taxes for almost everyone else. But the loss of personal exemptions complicates things.

https://www.forbes.com/sites/anthon...rent-law-and-the-house-proposal/#4b9dfe864425

Loss of medical deductions is significant for many, as well.

 

[rmndcat]

Sounds a lot like the fairytale being told by the republicans. In the end after many deductions are taken away the middle income and even the lower income folks will pay more and the top 1% and large corporations less. How do you explain doing away with the minimum tax requirement and the estate tax doesn't help the wealthiest tax payers.

I guess that's my fundamental question: Why the rush to overhaul the tax structure? I could see rationalizing the corporate tax and maybe revise it to encourage re-patriating income. But the plans from both houses will have the net effect of exploding the deficit at a time when the economy is undergoing steady, albeit it modest, growth. If the economy needed stimulus from fiscal policy, that would justify taking on the additional debt. That's not where we are, though.

 

[hdhntr1]

Sounds a lot like the fairytale being told by the republicans. In the end after many deductions are taken away the middle income and even the lower income folks will pay more and the top 1% and large corporations less. How do you explain doing away with the minimum tax requirement and the estate tax doesn't help the wealthiest tax payers.

AMT is something that should have been done away with a long time ago. Originally it was to catch a few but as times changed, it morphed into something never intended. As far as the inheritance tax, it keeps a lot of lawyers busy and complicates things a bunch. As far as the very wealthy, they don't pay it as they have armys of lawyers and accountants to prevent it. The people that get caught are those in the middle. It has forced businesses to be closed and farms to be sold and burdened a lot of people. And current proposals are to increase the exemptions initially rather than eliminate it which would exempt all but the very rich and simplify estate planning for those no longer affected.

I am not in favor of eliminating the individual exemption and that distorts some things but other than that it looks like a good deal for lower and middle class. Keep them and it is a tremendous deal for much of the middle class and below. As far as deductions taken away, who and how are they hurt when offset by doubling of the standard deduction? As far a medical deductions you already have to spend more than 10% of the adjusted gross before it you can deduct a dime and even that it is only the amount above 10% and you have to be itemizing. As far as state and local property and income taxes, does it and interest payed exceed $12 or $24K? If not it cost you nothing and if you spend less on those items, you end up ahead. Great deal for those that currently do not itemize which is most everyone that rents and many that live in lower cost homes. Most of the rest will not be helped as much but won't really be hurt. Again you have to pay that much, generally you are making a pretty fair income so again, middle class not generally negatively affected by losing them and lower end definitely helped. Remember when you itemize, you have to exceed the standard deduction before it helps you. And it definitely simplifies taxes for a lot of people as far fewer would be itemizing. Lower tax rates would help as well.

As far as high income people(top 5% family income about $200K ) they could lose a lot of deductions and even with some lower rates, they would likely pay more. Basically anyone below about the top 10% (household income above $150K) would be unlikely to be hurt by loss of deductions (and most would be helped by the doubling of the standard deduction) If the middle class is 20-80th percentile that ends at about $115K and they are unlikely to be hurt by the loss of deductions. See the chart below for income percentiles.

So basically it helps most everyone in the lower and middle class and negatively affects those at the top of the scale. So basically your statement (other than businesses being helped would appear to be incorrect.

Distribution of household income in 2014 according to US Census data


This graph shows the percentage of persons and households in each of the income groups shown.[citation needed]


The percent of households with six figure incomes and individuals with incomes in the top 10%, exceeding $77,500.[citation needed]
US Census Bureau figures for 2014
Income of Household Number (thousands) [44] Percentage Percentile Mean Income [44] Mean number of earners [45] Mean size of household [45]
Total 124,587 — — $75,738 1.28 2.54
Under $5,000 4571 3.67% 0 $1,080 0.20 1.91
$5,000 to $9,999 4320 3.47% 3.67th $7,936 0.34 1.78
$10,000 to $14,999 6766 5.43% 7.14th $12,317 0.39 1.71
$15,000 to $19,999 6779 5.44% 12.57th $17,338 0.54 1.90
$20,000 to $24,999 6865 5.51% 18.01th $22,162 0.73 2.07
$25,000 to $29,999 6363 5.11% 23.52th $27,101 0.82 2.19
$30,000 to $34,999 6232 5.00% 28.63th $32,058 0.94 2.27
$35,000 to $39,999 5857 4.70% 33.63th $37,061 1.04 2.31
$40,000 to $44,999 5430 4.36% 38.33th $41,979 1.15 2.40
$45,000 to $49,999 5060 4.06% 42.69th $47,207 1.24 2.52
$50,000 to $54,999 5084 4.08% 46.75th $51,986 1.32 2.54
$55,000 to $59,999 4220 3.39% 50.83th $57,065 1.41 2.56
$60,000 to $64,999 4477 3.59% 54.22th $62,016 1.46 2.64
$65,000 to $69,999 3709 2.98% 57.81th $67,081 1.51 2.67
$70,000 to $74,999 3737 3.00% 60.79th $72,050 1.57 2.73
$75,000 to $79,999 3484 2.80% 63.79th $77,023 1.60 2.79
$80,000 to $84,999 3142 2.52% 66.58th $81,966 1.63 2.79
$85,000 to $89,999 2750 2.21% 69.11th $87,101 1.77 2.90
$90,000 to $94,999 2665 2.14% 71.31th $92,033 1.82 2.96
$95,000 to $99,999 2339 1.88% 73.45th $97,161 1.81 2.97
$100,000 to $104,999 2679 2.15% 75.33th $101,921 1.79 3.01
$105,000 to $109,999 2070 1.66% 77.48th $107,187 1.88 3.01
$110,000 to $114,999 1922 1.54% 79.14th $112,069 1.93 3.12
$115,000 to $119,999 1623 1.30% 80.68th $117,133 1.98 3.14
$120,000 to $124,999 1863 1.50% 81.99th $122,127 1.93 3.09
$125,000 to $129,999 1452 1.17% 83.48th $127,166 1.99 3.12
$130,000 to $134,999 1512 1.21% 84.65th $131,863 2.00 3.18
$135,000 to $139,999 1219 0.98% 85.86th $137,284 1.98 3.11
$140,000 to $144,999 1290 1.04% 86.84th $142,199 1.97 3.03
$145,000 to $149,999 1024 0.82% 87.87th $147,130 2.01 3.11
$150,000 to $154,999 1146 0.92% 88.70th $151,940 1.85 3.12
$155,000 to $159,999 848 0.68% 89.62th $157,177 2.08 3.15
$160,000 to $164,999 875 0.70% 90.30th $162,019 2.02 3.13
$165,000 to $169,999 786 0.63% 91.00th $167,101 2.10 3.16
$170,000 to $174,999 717 0.58% 91.63th $172,169 2.17 3.21
$175,000 to $179,999 607 0.49% 92.21th $177,187 2.19 3.28
$180,000 to $184,999 619 0.50% 92.69th $182,055 2.03 3.19
$185,000 to $189,999 556 0.45% 93.19th $187,299 2.03 3.20
$190,000 to $194,999 485 0.39% 93.64th $192,241 2.19 3.29
$195,000 to $199,999 436 0.35% 94.03th $197,211 2.23 3.27
$200,000 to $249,999 3249 2.61% 94.38th $220,267 2.08 3.24
$250,000 and over 3757 3.02% 96.98th $402,476

 

[hdhntr1]

Loss of medical deductions is significant for many, as well.

Really? You have to spend more than 10% of your adjusted gross before you can deduct a dime. And then only the amount over 10% and only if you itemize. Since the increase to 10% that occurred with the implementation of ACA, it has been hard to get much from it. How many of the 30% that currently itemize use it?

You can only deduct medical expenses in excess of 7.5% of your adjusted gross income. The situation you cite probably wouldn't qualify. These hypothetical Seniors either have paid off their home, or have a very low mortgage interest payment if they have lived in that home for most of their lives. They are MUCH better off with a $24,000 standard deduction than itemizing with property taxes of say $12,000/year and state taxes of say 6% of $60,000 taxable income.....

That number was changed to 10% with the implementation of ACA and only if you itemize,

 

[rmndcat]

Really? You have to spend more than 10% of your adjusted gross before you can deduct a dime. And then only the amount over 10% and only if you itemize. Since the increase to 10% that occurred with the implementation of ACA, it has been hard to get much from it. How many of the 30% that currently itemize use it?

That number was changed to 10% with the implementation of ACA and only if you itemize,

For those of us with extensive med expenses and who itemize, it is worth a few thousand, yes. I suppose one could argue whether that's many or just some.

 

[hdhntr1]

Why do you keep pushing this arguement?You did so on another thread before another poster reminded you that the $4050 per individual deduction is being eliminated. So a married couple with two or more kids is likely not coming out ahead in this regardless of whether they itemize or not. You keep spewing this arguement and completely ignore this very important detail. Why?

The thread was specifically on the loss of deductions and I stated I was only commenting on that aspect and not the effect of the potential loss of personal exemptions I was pointing out that the statement that eliminating those deductions would hurt large groups of people was incorrect because most would in fact end up with more deductions with the increased standard deduction than they would lose because certain items would no longer be deductible.

 

[hdhntr1]

For those of us with extensive med expenses and who itemize, it is worth a few thousand, yes. I suppose one could argue whether that's many or just some.

I am sorry you are able to use it.

 

[corbi296]

The thread was specifically on the loss of deductions and I stated I was only commenting on that aspect and not the effect of the potential loss of personal exemptions I was pointing out that the statement that eliminating those deductions would hurt large groups of people was incorrect because most would in fact end up with more deductions with the increased standard deduction than they would lose because certain items would no longer be deductible.

So the fact that the $4050 deduction per individual in a household is being eliminated shouldn't be factored in to the analysis?

 

[No Chores]

The thread was specifically on the loss of deductions and I stated I was only commenting on that aspect and not the effect of the potential loss of personal exemptions I was pointing out that the statement that eliminating those deductions would hurt large groups of people was incorrect because most would in fact end up with more deductions with the increased standard deduction than they would lose because certain items would no longer be deductible.

Which is precisely the point! Hopefully, you will continue to accurately analyze, clarify, and sometimes rebut some of the nonsense that appears here. (You're either an accountant or a very bright person or both.) Keep up the good work!

 

[willycat]

AMT is something that should have been done away with a long time ago. Originally it was to catch a few but as times changed, it morphed into something never intended. As far as the inheritance tax, it keeps a lot of lawyers busy and complicates things a bunch. As far as the very wealthy, they don't pay it as they have armys of lawyers and accountants to prevent it. The people that get caught are those in the middle. It has forced businesses to be closed and farms to be sold and burdened a lot of people. And current proposals are to increase the exemptions initially rather than eliminate it which would exempt all but the very rich and simplify estate planning for those no longer affected.

I am not in favor of eliminating the individual exemption and that distorts some things but other than that it looks like a good deal for lower and middle class. Keep them and it is a tremendous deal for much of the middle class and below. As far as deductions taken away, who and how are they hurt when offset by doubling of the standard deduction? As far a medical deductions you already have to spend more than 10% of the adjusted gross before it you can deduct a dime and even that it is only the amount above 10% and you have to be itemizing. As far as state and local property and income taxes, does it and interest payed exceed $12 or $24K? If not it cost you nothing and if you spend less on those items, you end up ahead. Great deal for those that currently do not itemize which is most everyone that rents and many that live in lower cost homes. Most of the rest will not be helped as much but won't really be hurt. Again you have to pay that much, generally you are making a pretty fair income so again, middle class not generally negatively affected by losing them and lower end definitely helped. Remember when you itemize, you have to exceed the standard deduction before it helps you. And it definitely simplifies taxes for a lot of people as far fewer would be itemizing. Lower tax rates would help as well.

As far as high income people(top 5% family income about $200K ) they could lose a lot of deductions and even with some lower rates, they would likely pay more. Basically anyone below about the top 10% (household income above $150K) would be unlikely to be hurt by loss of deductions (and most would be helped by the doubling of the standard deduction) If the middle class is 20-80th percentile that ends at about $115K and they are unlikely to be hurt by the loss of deductions. See the chart below for income percentiles.

So basically it helps most everyone in the lower and middle class and negatively affects those at the top of the scale. So basically your statement (other than businesses being helped would appear to be incorrect.

Distribution of household income in 2014 according to US Census data


This graph shows the percentage of persons and households in each of the income groups shown.[citation needed]


The percent of households with six figure incomes and individuals with incomes in the top 10%, exceeding $77,500.[citation needed]
US Census Bureau figures for 2014
Income of Household Number (thousands) [44] Percentage Percentile Mean Income [44] Mean number of earners [45] Mean size of household [45]
Total 124,587 — — $75,738 1.28 2.54
Under $5,000 4571 3.67% 0 $1,080 0.20 1.91
$5,000 to $9,999 4320 3.47% 3.67th $7,936 0.34 1.78
$10,000 to $14,999 6766 5.43% 7.14th $12,317 0.39 1.71
$15,000 to $19,999 6779 5.44% 12.57th $17,338 0.54 1.90
$20,000 to $24,999 6865 5.51% 18.01th $22,162 0.73 2.07
$25,000 to $29,999 6363 5.11% 23.52th $27,101 0.82 2.19
$30,000 to $34,999 6232 5.00% 28.63th $32,058 0.94 2.27
$35,000 to $39,999 5857 4.70% 33.63th $37,061 1.04 2.31
$40,000 to $44,999 5430 4.36% 38.33th $41,979 1.15 2.40
$45,000 to $49,999 5060 4.06% 42.69th $47,207 1.24 2.52
$50,000 to $54,999 5084 4.08% 46.75th $51,986 1.32 2.54
$55,000 to $59,999 4220 3.39% 50.83th $57,065 1.41 2.56
$60,000 to $64,999 4477 3.59% 54.22th $62,016 1.46 2.64
$65,000 to $69,999 3709 2.98% 57.81th $67,081 1.51 2.67
$70,000 to $74,999 3737 3.00% 60.79th $72,050 1.57 2.73
$75,000 to $79,999 3484 2.80% 63.79th $77,023 1.60 2.79
$80,000 to $84,999 3142 2.52% 66.58th $81,966 1.63 2.79
$85,000 to $89,999 2750 2.21% 69.11th $87,101 1.77 2.90
$90,000 to $94,999 2665 2.14% 71.31th $92,033 1.82 2.96
$95,000 to $99,999 2339 1.88% 73.45th $97,161 1.81 2.97
$100,000 to $104,999 2679 2.15% 75.33th $101,921 1.79 3.01
$105,000 to $109,999 2070 1.66% 77.48th $107,187 1.88 3.01
$110,000 to $114,999 1922 1.54% 79.14th $112,069 1.93 3.12
$115,000 to $119,999 1623 1.30% 80.68th $117,133 1.98 3.14
$120,000 to $124,999 1863 1.50% 81.99th $122,127 1.93 3.09
$125,000 to $129,999 1452 1.17% 83.48th $127,166 1.99 3.12
$130,000 to $134,999 1512 1.21% 84.65th $131,863 2.00 3.18
$135,000 to $139,999 1219 0.98% 85.86th $137,284 1.98 3.11
$140,000 to $144,999 1290 1.04% 86.84th $142,199 1.97 3.03
$145,000 to $149,999 1024 0.82% 87.87th $147,130 2.01 3.11
$150,000 to $154,999 1146 0.92% 88.70th $151,940 1.85 3.12
$155,000 to $159,999 848 0.68% 89.62th $157,177 2.08 3.15
$160,000 to $164,999 875 0.70% 90.30th $162,019 2.02 3.13
$165,000 to $169,999 786 0.63% 91.00th $167,101 2.10 3.16
$170,000 to $174,999 717 0.58% 91.63th $172,169 2.17 3.21
$175,000 to $179,999 607 0.49% 92.21th $177,187 2.19 3.28
$180,000 to $184,999 619 0.50% 92.69th $182,055 2.03 3.19
$185,000 to $189,999 556 0.45% 93.19th $187,299 2.03 3.20
$190,000 to $194,999 485 0.39% 93.64th $192,241 2.19 3.29
$195,000 to $199,999 436 0.35% 94.03th $197,211 2.23 3.27
$200,000 to $249,999 3249 2.61% 94.38th $220,267 2.08 3.24
$250,000 and over 3757 3.02% 96.98th $402,476

I have a lot of things I could say but think these type of opinion doesn't belong on a football message board and I'm going back and delete my earlier posting and feel you should consider doing the same. BTW, the current administration should be paying you by the line, even if some of it is not true.

 

[BigCat77]

Geez - take it to the rant board. I don't need to listen to another person spewing Trump BS

 

[corbi296]

Which is precisely the point! Hopefully, you will continue to accurately analyze, clarify, and sometimes rebut some of the nonsense that appears here. (You're either an accountant or a very bright person or both.) Keep up the good work!

What's the point of analyzing only certain components of a tax bill when you are ignoring a key piece that impacts all tax payers, whether you are itemizing or not? I guess the analysis would be relevant if the personal exemptions weren't being eliminated. Unfortunately they are and everyone needs to consider this impact of the proposal when assessing how this proposed bill will impact one's tax responsibility.