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    Exemptions Allowed Yet?

    In one of the tax proposals, they were going to increase the standard deduction to 24,000.00 for married couple. They were also going take away the exemptions. Never heard if they did? In my case, that would be a wash. Have 3 exemption and take the standard deduction.

    #2
    The version that came out of conference has exemptions set to zero.
    jklcpa

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      #3
      So my question is, if this law passes, how soon will we be able to advise clients on how to properly withhold now that many will have their withholding automatically decrease due to the standard deduction increase.

      In this area, I have many clients with more than one source of taxable income who use their main jobs to variously support the withholding not taken from a pension, a spouse's job, social security, rental income, a second job, etc. Even if they have withholding from other sources, in most of these cases, the new higher standard deduction change will reduce the withholding to nothing or nearly nothing. Likewise, though I am not sure about this, I suspect many will need to cover self-employment taxes that they never had to consider previously. I am estimating that a bit less than half of my clients will have a bigger tax bill next year, but more importantly, nearly 80% will likely be seriously under-withheld if they don't have additional money taken out. Since I am in New York, the change to federal taxes will significantly reduce the number of clients who can itemize on their state returns so there will be impact there as well.

      Taxpayers will need to avoid having more take home pay or face a huge balance due next year. I am sure the idiots in Congress are expecting the increase in take-home pay to convince many middle-class Americans that this is a real tax cut, but it will not work out that way in this part of the country. I know that the changes won't take place immediately and that the IRS will not be ready with new W-4 forms, but the first 2018 paychecks are only a few weeks away.

      Perhaps that IRS and the states should create a category with no standard deduction applied to compute the taxes withheld. I really think this is the wrong time for the government to be monkeying with the tax law.
      Doug

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        #4
        Supposedly IRS will have new withholding tables in February. It's probably going to take awhile to get client withholding correct, based on if they want to break-even or have a large refund.

        IMO this is a screw you to high cost of living, high tax states. There are 28 Republican reps from CA, NY and NJ in the house. If they would band together they could stop this bill, but it's highly unlikely that will happen.

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          #5
          I agree that other than people in the 10% bracket, most people should see taxes go down somewhat.

          But, here's the thing: FY ended 9.30.17 had a deficit of 666B. Even without the cuts, CBO estimates 2022 deficit to be over 1T. In 2022 interest on said debt will be 537B or 19% of non payroll tax revenue.

          Comment


            #6
            H-m-m. Maybe government should consider spending less? That's what rational people do when their income goes down.
            "The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith

            Comment


              #7
              Originally posted by FEDUKE404
              Far, far more significant increases in the deficits did not seem to bother anyone during the eight years of the prior administration.
              Deficits were higher in FY 2009-12, basically the same (679B) in 2013, and lower in 2014-16.

              If you want to look at the spending side only of the equation, spending increased an average of 7% per year in the 2001 to 2008, and increased an average of 3% per year from 2009 to 2016.

              To download the Historical Tables Introductory Text and Section notes as a PDF, click here (23 pages, 205 KB) Spreadsheets To download all Historical Tables in XLS format as a single ZIP file, click here (1 MB) Table 1.1—Summary of Receipts, Outlays, and Surpluses or Deficits (-): 1789–2029 Table 1.2—Summary of Receipts, Outlays, and Surpluses…


              Table 1.1. You'll need to add a column to calculate the annual spending percentage over the previous year.
              Last edited by kathyc2; 12-18-2017, 03:14 PM.

              Comment


                #8
                Originally posted by kathyc2 View Post
                Deficits were higher in FY 2009-12, basically the same (679B) in 2013, and lower in 2014-16.

                If you want to look at the spending side only of the equation, spending increased an average of 7% per year in the 2001 to 2008, and increased an average of 3% per year from 2009 to 2016.

                To download the Historical Tables Introductory Text and Section notes as a PDF, click here (23 pages, 205 KB) Spreadsheets To download all Historical Tables in XLS format as a single ZIP file, click here (1 MB) Table 1.1—Summary of Receipts, Outlays, and Surpluses or Deficits (-): 1789–2029 Table 1.2—Summary of Receipts, Outlays, and Surpluses…


                Table 1.1. You'll need to add a column to calculate the annual spending percentage over the previous year.
                Now you are trying to confuse our colleague with facts!
                "You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard

                Comment


                  #9
                  Originally posted by Rapid Robert View Post
                  Now you are trying to confuse our colleague with facts!
                  It's human nature to reject data that does not support perceptions.

                  Comment


                    #10
                    Originally posted by FEDUKE404
                    Far, far more significant increases in the deficits did not seem to bother anyone during the eight years of the prior administration.

                    FE
                    Didn't bother anyone? I seem to remember some very forceful voices from the GOP stating strong objections to raising the deficit anytime the prior administration tried to get a bill through.

                    Comment


                      #11
                      It's awfully hard for a person to understand something when their livelihood depends upon their not understanding it. This applies especially in the case of politicians.
                      "The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith

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