IRS data show that 79 percent of taxpayers who pay the mandate tax make less than $50,000 and 37 percent make less than $25,000.The best argument mandate supporters can muster is that if people are not taxed for opting out of Obamacare, more people will opt out.But it’s hard to see how people who might sign up exclusively to avoid the mandate tax are hurt by having the option to say no.
“They are just wanting to prepare themselves for this new legislation that is coming into effect”, Scott said of the calls. We think the best approach is to view today’s tax reform in the spirit of Niebuhr’s prayer: Recognizing that most of the reform falls into the category of things we cannot change, we must therefore try to focus on the small parts that we can.
The tax bill also incorporated the curtailment of the Obamacare medical insurance program in order to scale back fiscal spending.
Tax collectors all over are seeing a surge in property tax prepayments before the end of the year. “It was going to be on a postcard”. Tax cuts were a central plank of Trump’s successful presidential campaign and represent his first major legislative victory in office. Many more taxpayers next year will be taking the standard deduction, which almost doubles to $12,000 for singles and $24,000 for couples – especially because they’ll have less incentive to deduct state and local taxes. “On net, it’s not going to be any simpler”. The final law follows the senate’s version, so that an individual who dies in 2018 or after will have a $11.2 million exemption, and a married couple can double that to $22.4 million.
Other deductions have been repealed as well, such as alimony, tax-preparation fees and casualty losses. For families making $120,000 a year or less, New Jersey’s income tax ranks 43rd in the country – below Pennsylvania and DE, and way below Virginia, the Carolinas and Georgia.
This could hurt people with heavy tax burdens in such high-tax states as New York, New Jersey and California. That change was also in the Senate bill.
Not having to itemize would reduce the time and cost of filing taxes. Keep in mind that the rules in this area are complex and may require a tax professional’s input.
A large number of people could benefit: More than 6 million people in the Golden State claimed state and local tax deductions in 2015. The state income tax deduction tends to be higher, and current law forces you to pick one or the other, not both. What’s likely not deductible, however, is trying to make property tax payments for the 2018 tax year that haven’t even been determined or billed yet.
“If they have the money to pay it, if they can’t write if off next year, and if Stamford is accepting, we’re advising our clients to do it”, she said. There is no limit in existing law.
In a high tax state like New Jersey, that will hit some homeowners pretty hard. “The Hamptons, located at the east end of New York” s Long Island, is a traditional summer escape for rich New Yorkers.
“For them, it may be a simplification, but it’s not a happy one”, Kleinbard said. For high-earners in high-tax states, this means federal income taxes will go up-which may cause pressure on those states to cut taxes, which would mean a loss of state revenue. That means paying state taxes now – before the cap kicks in – may be the smart move. So for numerous people who now pay it, the bill will simplify tax filing.
The prepayment only applies to property taxes, and can total well into the five figures for some families, but that’s not stopping a record number of people from taking advantage of it.
“From a simplification standpoint, you’d prefer no AMT to any AMT”, Rosenberg said. Well now we know what Republican “reform” looks like: middle income families get a modest adjustment and businesses get new loopholes to pass through income to lower rates. The effective corporate tax rate, which includes local tax, will be decreased from around 41 percent to around 28 percent, which is lower than the levels in such countries as Japan and Germany.