tax cut bill- my understanding

[kathyc2]

Reading through the actual code of tax change proposal I’m 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 don’t 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 won’t be offended to be corrected.

[kathyc2]

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

[Uncle Sam]

I didn't see anything about an additional standard deduction amount for seniors.

[kathyc2]

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.

[New York Enrolled Agent]

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.

[kathyc2]

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.

[New York Enrolled Agent]

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

[ttbtaxes]

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

[kathyc2]

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?

[ttbtaxes]

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

[DonB]

Gone-- Alimony deduction

Gone??? taxable alimony?

[New York Enrolled Agent]

Gone-- Alimony deduction

Gone??? taxable alimony?

Yes

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

[Snaggletooth]

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.

[Rapid Robert]

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.

[Snaggletooth]

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.