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tax cut bill- my understanding

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    tax cut bill- my understanding

    Reading through the actual code of tax change proposal Iím coming up with the following:

    Gone:

    Personal exemption deduction
    Lifetime Learning credit
    Student loan interest deduction
    Tuition deduction
    Employer education exemption
    Mortgage interest on second home
    Casualty loss deduction
    Sch A tax prep and employee business deductions
    Alimony deduction
    Moving expense deduction and non-taxable exclusion for employer provided benefits for moving
    Employer 125 exclusion for dependent care
    State and local income tax deduction
    AMT

    Modified:

    AOC expands to 5 years
    New mortgages 500K limit for interest deduction
    121 exclusion becomes 5 out of 8 years instead of 2/5 and has AGI limitations
    Sch A RE deduction limited to 10K
    $1000 child tax credit becomes 1,600, but refundable portion is still limited to 1,000

    New:
    $300 credit for TP, spouse and others on return that donít get child tax credit

    This is what I got from reading though it for non-business 1040 returns. If anyone read something different in it, I wonít be offended to be corrected.

    #2
    Also, it looks like Sch A medical expense deduction goes away, but that section had me quite confused.

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      #3
      I didn't see anything about an additional standard deduction amount for seniors.
      Uncle Sam, CPA, EA. ARA, NTPI Fellow

      Comment


        #4
        Originally posted by Uncle Sam View Post
        I didn't see anything about an additional standard deduction amount for seniors.
        I don't find any reference to 63(c)(3), so I assume it stays.

        Comment


          #5
          Kathy

          Did you read section 1004 of the bill? It adds a new section 4 to the IRC and gives new meaning to the phrase "tax simplification". It deals with the 25% rate pass through concept.

          Comment


            #6
            Originally posted by New York Enrolled Agent View Post
            Kathy

            Did you read section 1004 of the bill? It adds a new section 4 to the IRC and gives new meaning to the phrase "tax simplification". It deals with the 25% rate pass through concept.
            I tried, but the details of all that made my head hurt.

            I was mainly looking if there is stuff I want to give clients a heads up on as to what they can still do this year. The vast majority of my clients that itemize are not over the 24.4K, especially after eliminating state and local tax deduction. For those that are charitable, I'm going to recommend that they look at pushing as much as their planned 2018 giving to 2017 as they have the funds for in order to have it be deductible.

            Comment


              #7
              Originally posted by Uncle Sam View Post
              I didn't see anything about an additional standard deduction amount for seniors.
              Sam - Section 1002 of the bill has some conforming amendments:

              (2) Section 63 is amended by striking sub- sections (f) and (g).

              FYI - ß63(f) is where the additional amounts for age & blindness are contained. Thus "gone" (if passed)

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                #8
                Interest on primary residence only, not second home, starting with new indebtedness

                business income tax rate of 20%; the 30%/70% and professional services rules
                Last edited by ttbtaxes; 11-08-2017, 07:35 AM.

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                  #9
                  Originally posted by ttbtaxes View Post
                  Interest on primary residence only, not second home, starting with new indebtedness

                  business income tax rate of 25%; the 30%/70% and professional services rules
                  Are you saying that the interest on second home is grandfathered in?

                  Comment


                    #10
                    Yes, the new proposal would apply to new debt incurred after 11-2-17. These rules are contained in Section 1302 of the bill.

                    Comment


                      #11
                      Gone-- Alimony deduction

                      Gone??? taxable alimony?

                      Comment


                        #12
                        Originally posted by DonB View Post
                        Gone-- Alimony deduction

                        Gone??? taxable alimony?
                        Yes

                        Section 1309 of the Act also includes a repeal of alimony from gross income

                        Comment


                          #13
                          Something for Everyone? Erosion?

                          Yes, it appears there is something for everyone. Also losses for everyone as well.

                          There is a factor I call "erosion", when sufficient levels of income occur, the deductibility of itemized deductions and personal exemption begin to erode away. In fact, the personal exemptions can erode away completely. But if there are no personal exemptions, then this won't happen, right? Or will the erosion affect the $300 per listed people on the return?

                          This is no doubt the most sweeping bill since 1986, maybe even more so.

                          Comment


                            #14
                            Originally posted by Snaggletooth View Post
                            But if there are no personal exemptions, then this won't happen, right? Or will the erosion affect the $300 per listed people on the return?

                            This is no doubt the most sweeping bill since 1986, maybe even more so.
                            Are you looking at credit phase-outs and deduction phase-outs as being roughly equivalent? I thought the $300 was a credit, not a deduction.

                            As for "erosion", isn't the Pease limitation removed? And the standard deduction of course never phases out.

                            As for "sweeping", well maybe it will end up being swept into the dustbin, who knows? California economy, where they raised taxes, is doing well, while Kansas economy, where they cut taxes, went down.

                            Comment


                              #15
                              Originally posted by Rapid Robert View Post
                              I thought the $300 was a credit, not a deduction.

                              It is indeed a credit, but doesn't mean it can't be phased out. For most taxpayers who actually pay taxes, a $300 credit is worth less than a $4000 exemption. For those who don't pay, it will help them provided the credit is refundable.

                              As for "erosion", isn't the Pease limitation removed? And the standard deduction of course never phases out.

                              I don't know Robert. That was the biggest part of my question.

                              As for "sweeping", well maybe it will end up being swept into the dustbin, who knows? California economy, where they raised taxes, is doing well, while Kansas economy, where they cut taxes, went down.
                              Interesting observation. Most people are taught to believe that lower taxes help the economy, and higher taxes drains the economy with non-productive wealth. My own belief is it doesn't have to be that way if the spending that results is wisely spent. In general, I don't think that happens.

                              The captions as shown incorrectly attribute Robert's quote to include some of my answers. Some people are smart enough to fix this display. Not me.

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