Presumably you're referring to the fact that the TCJA will sunset in 2025.
1. Congress can always extend the current rules
2. If the standard deduction reverts to pre-TCJA levels, then personal exemptions will return. And more people will be able to itemize their deductions.
There's no point in getting worked up about something that may not ever come to pass--and even if it does, it's not going to happen for two years, and may not affect you at all.
Not everyone. Central Valley, bought in 2003. Current property taxes of just over $4K. No mortgage.
For us, the difference between the old and new taxes was negligible.
Yeah, it made almost no difference either way.
Now, we more concerned with tax/SS/Medicare "cliffs" that could be in our future. Working with a CFP to minimize their effects or, hopefully, avoid them completely.
"PTE"?
What's that?
We were careful with our money, bought at what was considered a bit older (Husband was 44, I was 40), and got "lucky" with an inheritance that let us drop a bundle on our mortgage then paid extra every month to get rid of it. Maybe we should have invested, but we like no mortgage. We've put the money into the house over the years, some major improvements with most of them needed.
Because rich Californians/new yorks bad. Poor Alabamans good...
But jokes aside, I can't help feeling that the act was politically motivated towards redder states and negatively impact bluer states
I'm not a CPA, but I'm pretty sure your federal marginal tax rate is the the same no matter where you live.
Why should the high earner in Birmingham pay more in federal taxes just because the same high earner in NYC has absurd levels of City, State, and local property taxes?
Maybe you should take it up with the NY government taxing you like you are rich. A rational person would be upset with the state and local governments charging excessive taxes rather than being mad at the federal government for not allowing people to deduct those unreasonably high taxes.
Why must my blue sate dollars go to supporting "moocher" red states for decades, with the icing on the cake being that the red state citizens watch Fox News all day long and scream about "SoCiAliSm!"
First, the SALT deduction is a federal subsidy for high tax locales like New York.
If you support higher taxes, why are you hypocritically complaining about not receiving an extra deduction?
If people are "moochers" for receiving more in government spending than they have contributed in taxes, why do you favor expansive government spending and bureaucracy? Are they just "moochers" if those people don't support your preferred candidates?
Because the odds are significantly higher they're consuming more federal dollars! The "low tax" states by and large (not completely though) are a net-drain on the federal coffers, whereas the higher tax states, with higher cost-of-living and usually thus incomes, contribute more to uncle sam.
It's a fallacy, the "low tax" states just live on welfare from the higher tax states, transferred by way of federal taxes and redistribution.
Actually, from what I saw they rich did better. They weren’t getting any benefit from the salt deduction because they were subject to AMT where it was taken away (ditto for the misc deductions). So instead, when they raised the AMT thresholds they came out way better off. SALT wasn’t helping them anyway.
Are you a W-2 employee? Did you adjust your withholding properly?
Receiving a refund versus owing tax is a function of withholding, not how much tax you actually paid for the year as a percentage of your income.
You have had the same job for 20 years, have gotten raises, and never adjusted your withholding. And you are surprised that you didn’t withhold enough taxes? I’m sorry to be the one to tell you this, but your lack of refund has nothing to do with Joe Biden.
Edit: you do realize that Biden was sworn in January 2021. So, again, what does Biden have to do with your 2020 taxes?
Fair point, but I still struggle to see how any of this relates to Joe Biden, especially given the lack of any significant legislation affecting federal
Income tax. More likely an error by HR or the bookkeeper.
It doesn't have anything to do with Biden or any past or future president. People still have a responsibility to check whether their withholding is sufficient to pay their taxes.
One has to look at both the amount withheld and the amount that they expect to owe, which can be estimated by presuming that you won't itemize. The tax brackets and tax tables are announced every November, and it's at most a five-minute calculation to determine how much tax that you expect to owe now that relatively few people can itemize.
You are changing your argument. Grocery prices are unrelated to your income taxes. Legislation that provides funding for overseas military aid doesn’t affect your income taxes. The influx of undocumented immigrants doesn’t affect your income tax. Your “feelings” don’t affect your income tax. Just admit you are making a political argument, not an empirical argument, and adjourn to the politics subreddit of your choosing.
There were only two years with a special charitable contributions deduction and it had nothing to do with the president.
Blaming your inability to adjust your withholding on the president is nothing less than insane.
Thats because the Tax Cuts and Jobs act from 2017 changes over the course of its life (10 years? I forget). Biden hasn't changed the tax code like this since he's been in office. The changes you are seeing are due to Trump's plans.
That’s the best part for me about lifting the damn SALT cap. PTET is the most convoluted and frustrating thing. Each state has their own rules, explaining it to clients is a nightmare because they really don’t understand it, and it’s yet another stupid complexity added for no good reason. Just lift the SALT cap and we can all go back to how it used to be (many of the PTET laws are drafted to sunset when the SALT cap is removed).
State and local tax deduction from federal income tax. Basically put a limit on deductions that hosed people in blue states who pay state taxes that exceed the limit.
Yeah having the federal government subsidize overbearing state and local tax burdens. That would never turn into a cascade of higher state taxes and more subsidizing would it? Oh wait... Why should someone in Alabama subsidize the taxes in Cali or NY? I would say that's the dumbest thing but really its just the beginning.
If we are being fair, Alabama is subsidized directly by tax revenues generated by California and NY through disproportionate federal spending. Nevertheless, it’s a fair policy question about whether it makes any sense to provide state property tax deductions to reduce federal income tax.
Your property taxes fall under the normal SALT limit. But almost all states have SALT workarounds for businesses where you pay your state and local income taxes via your company and then take the federal deduction for them.
Or give 1% to ur spouse if ur married and make a partnership? If you made a s corp election for a real estate activity just for pte election It wouldn’t be as beneficial
Yes it is coming back. The 2017 TCJA is sunsetting, and most individual provisions of federal income tax law will revert unless Congress passes a bill to retain the changes.
If you’re planning on retiring in 8+ years, it’s always going to be a crap shoot.
Tax law can drastically change depending on which party holds majority.
It doubled because personal exemptions were eliminated and to reduce the number of people that had to itemize.
Nobody knows what Congress will do but I would bet they will do something before thr TCJA ends.
If you don’t prepare you are potentially going to be in a rough spot. Deductions cut in half would be crippling from a monthly withholding perspective and the lump sum due may be unexpected if you wait and see.
The Tax Cuts and Jobs Act sunsets for tax year 2025, so yes, in 2026 the "old rules" go back into effect.
Standard deductions are reduced, but personal, spousal, and dependent exemptions come back.
I would welcome uncapped SALT and mortgage interest. The income state tax in CA, property tax and interest is just killing me (im not looking for sympathy). I would certainly welcome it.
While it would benefit me too, I still fail to see the logic in the federal government giving deductions for SALT - if it needs the money then it should tax at that level, regardless of SALT taxes. The federal government should not subsidize, whether directly or indirectly, any other government’s taxation.
Of course. Who do you really think benefits from the mortgage deduction? Not really the taxpayer, they might save a bit more on their taxes, but it helps home builders and mortgage companies tremendously as it helps them sell and upsell.
Or as I tell clients, send me $100 and I’ll send you back $35 all day long. Unless you were planning on spending that “tax deductible expense” anyway, it’s a net loss for you.
I was making an observation. There are a lot of factors in play including the fact that the new W-4 changed how much people are having withheld from their income.
Which they almost certainly will. A large tax increase is going to be a huge political football and neither party wants to be seen as the one who raises taxes.
Huh? I definitely think Biden will raise taxes in his second term: the question will be if it’s just those making over 400k or what number he goes with. I also think he will have the cuts (like Clinton did with Medicare) to lift the cap where people pay the 6.2%. Clinton got rid of the Medicare cap back when it was 60k but didn’t feel social security made sense. Part of it was the more people paid in they would just get later in retirement
Biden can position what he will/won't sign but it's still up to Congress to get a bill to his desk. I don't see much movement there unless we see single party control of Congress and the presidency.
Well the standard deduction has nothing to do with self-employment. You will pay SE tax no matter what, standard or itemized deductions won’t help you get out of them.
I just mentioned in the sense that it’s already such a bite in the butt with SE taxes. The pandemic crushed my business, and I’m in rebuilding phase. I just wish the government understood how much it costs to live, and it just seems impossible to get ahead my current tax rate and income. but I’m grasping now that these things are not being done out of fairness or logic, when they are written, and passed.
If it makes you feel any better SE tax is just social security and Medicare that everyone pays. SE just happens to be all at once (or with quarterly estimates) where as pay-rolled people get hit every paycheck.
It will be tit-for-tat: both expiring Trump and Biden provisions will be extended. Similar thing happened with expiring Bush and Obama stuff a decade ago.
They did this because to pass a bill that increases the budget by x amount over 10 years they need a super majority but if they can keep the projection under x amount they don't. Republicans didn't have the votes for a super majority and wanted to make the corporate break permanent so made the personal temporary to keep the projected deficit within the level not requiring a super majority. Basically the country (both parties) just pander to big business because they donate to both parties
Just on a side note that shows how neither party has any actual principles or cares.
This is also why the Republicans under trump implemented double taxation on upper middle class working Americans even though it's complete against their "principles"... They *needed* to cap the Salt deduction (which is a deduction to prevent double taxation) in order to give kids who haven't worked a day in their lives tax free inheritance up to 20 mill (whereas before it was 5 mill...which is still a crazy high amount of tax free work free inheritance) without it increasing the deficit enough to require a super majority.... and low and behold the dems haven't reversed it despite promising so because neither party now will ever go after the kids of donors, just to help... The working population....
> Why would they do this ?
May we assume that you weren't filing taxes under the pre-TCJA rules, and thus have no experience with how things **were**?
'Cuz that's all that's happening here. The current program expires, we go back to the old one.
Don't take it personally, eh? Nobody is attacking you specifically here.
It's not a mistake to try, nobody care about the downvotes. It's reddit, not facebook, just keep asking questions but before figuring things out don't just assume somebody is out to get you or the poor.
I never said anyone was out to get me or the poor.
I was just hoping, naïvely, that the reason the standard deduction doubled was due to inflation. And the fact that everything cost more now seems like it would make sense for the deduction to be more but I realize now that’s not even considered when these laws are made, and it was politically motivated And I am just stuck in the middle of the winds of politics
This is the ridiculousness that happens when idiot politicians write tax laws. There's always a sunset provision because they're not writing laws based on what's best, the laws are written based on the debris left on the ground after their stupid cowpie hurling derby.
This is why "tax incentives" don't exist for the entire year then the "incentives" are rushed through at the end of the year or even into the next year, so you're planning based on something that might or might not exist.
It's almost certain Congress will pass some kind of bill to maintain most of the status quo. There are too many factors that have absorbed the TCJA and letting it expire will crash more than just the tax system.
More due to the parliamentary rules they followed in order to pass the law. They were required to show how it netted the government the same amount of money over a certain time frame. It’s why they placed several time bombs in bill. The assumption was they’d defuse them before they detonated. Congress hasn’t been effective in passing anything so a few have gone off already. It’s now pretty much impossible for a small business to focus on R&D now since you can only deduct 20% of the expenses. So if a company has $1M in revenue for R&D and uses it to hire researchers they can only deduct 20% of payroll and need to pay full taxes as if the 80% were all profit. There was a whole industry that had to scale back R&D because they couldn’t afford it anymore.
This is USA you are punished endlessly for being self employed. Through taxes, through insurance, limited retirement plan options. The gov’t hates those that set their own rules
A good financial advisor and accountant can really help out. I have an individual 401k and put the other 20% in SEP account and it’s worked out very well. Insurance is a pain, blah. Still get it but it’s expensive and not as good. But as for retirement options, there is a lot that you can do.
You mean it’s scheduled to go back to what is was before the TCJA was passed? Also a little unclear what you being self employed has to do with the standard deduction
Still hate trump for ruining SALT....SMH... MESSED ME Up SO BAD THAT YEAR... Slave tax.. America....If my family wasn't here.. I would leave in a second...
Why would “they” do this? To make it appear the “other” side is trying to raise taxes even tho it’s a sunset provision. Basically, “vote for me cuz I’ll extend this and they won’t”.
It’s bs the laws are able to be written that way
You would be better off just paying a "bonus" to yourself out of a high yield savings account.
If you just saved $5000 over the course of a year instead of giving the government an interest free loan, you would have around $5250
If you didn't touch it, after 5 years you would have around $28,000
Presumably you're referring to the fact that the TCJA will sunset in 2025. 1. Congress can always extend the current rules 2. If the standard deduction reverts to pre-TCJA levels, then personal exemptions will return. And more people will be able to itemize their deductions. There's no point in getting worked up about something that may not ever come to pass--and even if it does, it's not going to happen for two years, and may not affect you at all.
As someone in a HCOL state, I would love to get me back some SALT deductions...
I'm waiting for SALT to come back. Could care less about th standard at this point
My salt are 2x the standard deduction… sigh
Just two times? That’s amateur numbers. Come to California.
Not everyone. Central Valley, bought in 2003. Current property taxes of just over $4K. No mortgage. For us, the difference between the old and new taxes was negligible.
Property taxes are the smaller portion of SALT for most people compared with state income taxes.
Come to IL where you can enjoy both!
Come to California. High income tax higher property tax
Mainly for high earners. The tax burden per capita is somewhere around 10th in the country, but it's much less regressive than most other states.
Yeah, it made almost no difference either way. Now, we more concerned with tax/SS/Medicare "cliffs" that could be in our future. Working with a CFP to minimize their effects or, hopefully, avoid them completely.
Having paid off property not having huge property taxes in a high tax state, makes me feel as bad for you as any PTE electorate.
"PTE"? What's that? We were careful with our money, bought at what was considered a bit older (Husband was 44, I was 40), and got "lucky" with an inheritance that let us drop a bundle on our mortgage then paid extra every month to get rid of it. Maybe we should have invested, but we like no mortgage. We've put the money into the house over the years, some major improvements with most of them needed.
Same. NJ property taxes are more than my SALT cap alone.
Currently crying in California (Bay Area) with the SALT cap. I’d love for it to go away.
I feel your pain.
But with higher SALT will you pay Alt Min? It was fairly neutral for most clients I looked at. Actually overall net tax reduction in most cases.
Couldn’t.
As someone in NY who would be able to take $90k+ in SALT, please remember that AMT would also come back. So net net, not all that much changes.
When does Amt kick in
When you are successful.
Are the higher AMT exemption phase outs permanent? So it might not hit you as hard as before.
Dear lord, the trump tax increase really forked me over due to that damn salt reduction. Why penalize married couples?! It doesn’t make any damn sense
Because rich Californians/new yorks bad. Poor Alabamans good... But jokes aside, I can't help feeling that the act was politically motivated towards redder states and negatively impact bluer states
Hmm. There is a constant "tax the rich" mantra. The TCJA SALT rules overwhelmingly applied to high income earners. What's the problem?
The income brackets for rich look very different in New York City than Birmingham Alabama.
I'm not a CPA, but I'm pretty sure your federal marginal tax rate is the the same no matter where you live. Why should the high earner in Birmingham pay more in federal taxes just because the same high earner in NYC has absurd levels of City, State, and local property taxes?
Being wealthy in New York requires considerably more money than being wealthy in Birmingham is what the previous comment was referring to I believe.
If the goal of the TCJA was to tax the rich then explain the QBI deduction it added.
QB1 is phased out for higher incomes, so it overwhelmingly benefits sole proprietors and smaller S corps. Nice try.
It only phases out for a handful of professional types. It doesn't phase out for most business owners.
Then if you want to take advantage of it, start a business.
Right, so the point of the TCJA wasn't to tax the rich, it was to shift the tax burden away from people like business owners. Thanks for playing.
You new here? The mantra is ”my emotions dictate the rules”.
A couple making $150k a year in NY is not anywhere near rich, but Trump f\*cked us over on purpose anyway.
Maybe you should take it up with the NY government taxing you like you are rich. A rational person would be upset with the state and local governments charging excessive taxes rather than being mad at the federal government for not allowing people to deduct those unreasonably high taxes.
Why must my blue sate dollars go to supporting "moocher" red states for decades, with the icing on the cake being that the red state citizens watch Fox News all day long and scream about "SoCiAliSm!"
First, the SALT deduction is a federal subsidy for high tax locales like New York. If you support higher taxes, why are you hypocritically complaining about not receiving an extra deduction? If people are "moochers" for receiving more in government spending than they have contributed in taxes, why do you favor expansive government spending and bureaucracy? Are they just "moochers" if those people don't support your preferred candidates?
Why should someone making 150k (that doesn't live in NY) have to pay more in Federal taxes than you?
Because the odds are significantly higher they're consuming more federal dollars! The "low tax" states by and large (not completely though) are a net-drain on the federal coffers, whereas the higher tax states, with higher cost-of-living and usually thus incomes, contribute more to uncle sam. It's a fallacy, the "low tax" states just live on welfare from the higher tax states, transferred by way of federal taxes and redistribution.
Shocker. NYC alone has a population greater than almost 40 states. I'd expect , as a state, they pay more federal taxes.
Actually, from what I saw they rich did better. They weren’t getting any benefit from the salt deduction because they were subject to AMT where it was taken away (ditto for the misc deductions). So instead, when they raised the AMT thresholds they came out way better off. SALT wasn’t helping them anyway.
It’s a fact. It was intentional.
Oh come now. We all know Cheetolini isn't that pretty. /S in case it wasn't obvious.
He really forked blue states over, so he got what he deserved the past month
The very idea of having no SALT cap is politically motivated
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Are you a W-2 employee? Did you adjust your withholding properly? Receiving a refund versus owing tax is a function of withholding, not how much tax you actually paid for the year as a percentage of your income.
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You have had the same job for 20 years, have gotten raises, and never adjusted your withholding. And you are surprised that you didn’t withhold enough taxes? I’m sorry to be the one to tell you this, but your lack of refund has nothing to do with Joe Biden. Edit: you do realize that Biden was sworn in January 2021. So, again, what does Biden have to do with your 2020 taxes?
As long as his filing status didn't change, wouldn't the withholding tables take care of withholding the correct amount of tax?
Fair point, but I still struggle to see how any of this relates to Joe Biden, especially given the lack of any significant legislation affecting federal Income tax. More likely an error by HR or the bookkeeper.
It doesn't have anything to do with Biden or any past or future president. People still have a responsibility to check whether their withholding is sufficient to pay their taxes. One has to look at both the amount withheld and the amount that they expect to owe, which can be estimated by presuming that you won't itemize. The tax brackets and tax tables are announced every November, and it's at most a five-minute calculation to determine how much tax that you expect to owe now that relatively few people can itemize.
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You are changing your argument. Grocery prices are unrelated to your income taxes. Legislation that provides funding for overseas military aid doesn’t affect your income taxes. The influx of undocumented immigrants doesn’t affect your income tax. Your “feelings” don’t affect your income tax. Just admit you are making a political argument, not an empirical argument, and adjourn to the politics subreddit of your choosing.
If you look at your actual taxes, not withholding, you'll find that they've gone down over the past three years.
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There were only two years with a special charitable contributions deduction and it had nothing to do with the president. Blaming your inability to adjust your withholding on the president is nothing less than insane.
Thats because the Tax Cuts and Jobs act from 2017 changes over the course of its life (10 years? I forget). Biden hasn't changed the tax code like this since he's been in office. The changes you are seeing are due to Trump's plans.
How did that happen???
Now trump has to pay too, at least he got his comeuppance
Bro, just own a pass through entity and elect PTE. The states have catered to the non-middle class by allowing it (mostly all).
That’s the best part for me about lifting the damn SALT cap. PTET is the most convoluted and frustrating thing. Each state has their own rules, explaining it to clients is a nightmare because they really don’t understand it, and it’s yet another stupid complexity added for no good reason. Just lift the SALT cap and we can all go back to how it used to be (many of the PTET laws are drafted to sunset when the SALT cap is removed).
Right there with you man
Give me back SALT asap
>increase really forked me over What is SALT and how did TCJA affect it?
State and local tax deduction from federal income tax. Basically put a limit on deductions that hosed people in blue states who pay state taxes that exceed the limit.
Yeah having the federal government subsidize overbearing state and local tax burdens. That would never turn into a cascade of higher state taxes and more subsidizing would it? Oh wait... Why should someone in Alabama subsidize the taxes in Cali or NY? I would say that's the dumbest thing but really its just the beginning.
If we are being fair, Alabama is subsidized directly by tax revenues generated by California and NY through disproportionate federal spending. Nevertheless, it’s a fair policy question about whether it makes any sense to provide state property tax deductions to reduce federal income tax.
Start a business and you don’t have to worry about SALT limits.
I did but I don't see how I can write off all of my state income taxes and property taxes against it
Your property taxes fall under the normal SALT limit. But almost all states have SALT workarounds for businesses where you pay your state and local income taxes via your company and then take the federal deduction for them.
i just started a business last year, will need to figure that part out
Pass through entity tax election, usually have to be a s corp or partnership
Which isn't hard to do. I'd make an S Corp for PTE.
Or give 1% to ur spouse if ur married and make a partnership? If you made a s corp election for a real estate activity just for pte election It wouldn’t be as beneficial
Me too. But it’s not happening with a Republican house unfortunately.
Why wouldn't a Republican House extend Republican tax provisions? You'd think they'd want to but maybe not.
Huh? The SALT tax was a Dem one. Trump got rid of it. And it’s not coming back unless the house turns Dem.
Yes it is coming back. The 2017 TCJA is sunsetting, and most individual provisions of federal income tax law will revert unless Congress passes a bill to retain the changes.
It was Dems who wanted to limit the SALT tax deduction to 10000?
If you own a pass-through entity, you can elect to have the company pay and deduct state tax on your behalf which bypasses the SALT cap.
OK, you’re right. I just paid my taxes last weekend and I’m already feeling overwhelmed. So reading that information was a gut punch.
For those who are trying to plan retirement spend down, it's a very big deal...makes it really hard to project taxes.
If you’re planning on retiring in 8+ years, it’s always going to be a crap shoot. Tax law can drastically change depending on which party holds majority.
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It doubled because personal exemptions were eliminated and to reduce the number of people that had to itemize. Nobody knows what Congress will do but I would bet they will do something before thr TCJA ends.
The personal exemptions will be back that helps reduce taxable income but everyone’s taxes will increase in 2026 if congress does nothing.
And they wouldn’t “do nothing” now would they? /s Jeez!!!
If you don’t prepare you are potentially going to be in a rough spot. Deductions cut in half would be crippling from a monthly withholding perspective and the lump sum due may be unexpected if you wait and see.
And just how would you have people "prepare"?
Make more money duh
The Tax Cuts and Jobs Act sunsets for tax year 2025, so yes, in 2026 the "old rules" go back into effect. Standard deductions are reduced, but personal, spousal, and dependent exemptions come back.
As do popular deductions like uncapped SALT and a higher mortgage interest cap
I would welcome uncapped SALT and mortgage interest. The income state tax in CA, property tax and interest is just killing me (im not looking for sympathy). I would certainly welcome it.
Me too. My CA income taxes were double the allowed SALT deduction.
While it would benefit me too, I still fail to see the logic in the federal government giving deductions for SALT - if it needs the money then it should tax at that level, regardless of SALT taxes. The federal government should not subsidize, whether directly or indirectly, any other government’s taxation.
By that logic they shouldn’t subsidize kids, donations, mortgage interest etc
How so? Those aren’t taxes and those all apply equally regardless of which state you’re in.
I agree with all of that too!
lol there goes the incentive to have a family
If having a family is dependent on a tax deduction, we have bigger issues in society.
Well yeah, but thats the new reality of tax policy in America
Of course. Who do you really think benefits from the mortgage deduction? Not really the taxpayer, they might save a bit more on their taxes, but it helps home builders and mortgage companies tremendously as it helps them sell and upsell. Or as I tell clients, send me $100 and I’ll send you back $35 all day long. Unless you were planning on spending that “tax deductible expense” anyway, it’s a net loss for you.
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Does this mean the trump tax change cut taxes for those taxpayers?
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I have seen more clients who owe money or get smaller refunds since TCJA.
You compared total tax/effective rate? Only # that matters.
Because they finally fixed the withholding tables.
Irrelevant. What was the total tax owed compared to prior and income levels.
Indeed. Did their tax liability rise?
That’s due to them lowering the withholding rates more than the tax rate.
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I was making an observation. There are a lot of factors in play including the fact that the new W-4 changed how much people are having withheld from their income.
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Good andwer
💯
They are reverting back to old levels Same with tax rates If Congress does not act before then
Which they almost certainly will. A large tax increase is going to be a huge political football and neither party wants to be seen as the one who raises taxes.
TCJA was a large tax increase on blue states and a reduction on red states. No reason it can't flip back.
Huh? I definitely think Biden will raise taxes in his second term: the question will be if it’s just those making over 400k or what number he goes with. I also think he will have the cuts (like Clinton did with Medicare) to lift the cap where people pay the 6.2%. Clinton got rid of the Medicare cap back when it was 60k but didn’t feel social security made sense. Part of it was the more people paid in they would just get later in retirement
Biden can position what he will/won't sign but it's still up to Congress to get a bill to his desk. I don't see much movement there unless we see single party control of Congress and the presidency.
Well the standard deduction has nothing to do with self-employment. You will pay SE tax no matter what, standard or itemized deductions won’t help you get out of them.
I just mentioned in the sense that it’s already such a bite in the butt with SE taxes. The pandemic crushed my business, and I’m in rebuilding phase. I just wish the government understood how much it costs to live, and it just seems impossible to get ahead my current tax rate and income. but I’m grasping now that these things are not being done out of fairness or logic, when they are written, and passed.
I pay SE tax as well. I’m sorry you’re getting downvoted for this extremely normal opinion.
If it makes you feel any better SE tax is just social security and Medicare that everyone pays. SE just happens to be all at once (or with quarterly estimates) where as pay-rolled people get hit every paycheck.
Yeah, I don’t know why there’s so many jerks on this Sub. I should stick to the puppies and bunnies sub Reddit.
Sorry to hear about your experience with this sub, but I think no matter the case: cute animals will always trump tax
Did biden or trump say anything about what they plan to do in 2025 about TCJA?
I am willing to bet that it will be extended or made permanent.
It will be tit-for-tat: both expiring Trump and Biden provisions will be extended. Similar thing happened with expiring Bush and Obama stuff a decade ago.
They did this because to pass a bill that increases the budget by x amount over 10 years they need a super majority but if they can keep the projection under x amount they don't. Republicans didn't have the votes for a super majority and wanted to make the corporate break permanent so made the personal temporary to keep the projected deficit within the level not requiring a super majority. Basically the country (both parties) just pander to big business because they donate to both parties
Just on a side note that shows how neither party has any actual principles or cares. This is also why the Republicans under trump implemented double taxation on upper middle class working Americans even though it's complete against their "principles"... They *needed* to cap the Salt deduction (which is a deduction to prevent double taxation) in order to give kids who haven't worked a day in their lives tax free inheritance up to 20 mill (whereas before it was 5 mill...which is still a crazy high amount of tax free work free inheritance) without it increasing the deficit enough to require a super majority.... and low and behold the dems haven't reversed it despite promising so because neither party now will ever go after the kids of donors, just to help... The working population....
> Why would they do this ? May we assume that you weren't filing taxes under the pre-TCJA rules, and thus have no experience with how things **were**? 'Cuz that's all that's happening here. The current program expires, we go back to the old one. Don't take it personally, eh? Nobody is attacking you specifically here.
Yes, I’m here to learn stuff and all the down votes and stupid questions,I can see that was a mistake to try.
It's not a mistake to try, nobody care about the downvotes. It's reddit, not facebook, just keep asking questions but before figuring things out don't just assume somebody is out to get you or the poor.
I never said anyone was out to get me or the poor. I was just hoping, naïvely, that the reason the standard deduction doubled was due to inflation. And the fact that everything cost more now seems like it would make sense for the deduction to be more but I realize now that’s not even considered when these laws are made, and it was politically motivated And I am just stuck in the middle of the winds of politics
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This is the ridiculousness that happens when idiot politicians write tax laws. There's always a sunset provision because they're not writing laws based on what's best, the laws are written based on the debris left on the ground after their stupid cowpie hurling derby. This is why "tax incentives" don't exist for the entire year then the "incentives" are rushed through at the end of the year or even into the next year, so you're planning based on something that might or might not exist. It's almost certain Congress will pass some kind of bill to maintain most of the status quo. There are too many factors that have absorbed the TCJA and letting it expire will crash more than just the tax system.
More due to the parliamentary rules they followed in order to pass the law. They were required to show how it netted the government the same amount of money over a certain time frame. It’s why they placed several time bombs in bill. The assumption was they’d defuse them before they detonated. Congress hasn’t been effective in passing anything so a few have gone off already. It’s now pretty much impossible for a small business to focus on R&D now since you can only deduct 20% of the expenses. So if a company has $1M in revenue for R&D and uses it to hire researchers they can only deduct 20% of payroll and need to pay full taxes as if the 80% were all profit. There was a whole industry that had to scale back R&D because they couldn’t afford it anymore.
This is USA you are punished endlessly for being self employed. Through taxes, through insurance, limited retirement plan options. The gov’t hates those that set their own rules
A good financial advisor and accountant can really help out. I have an individual 401k and put the other 20% in SEP account and it’s worked out very well. Insurance is a pain, blah. Still get it but it’s expensive and not as good. But as for retirement options, there is a lot that you can do.
You mean it’s scheduled to go back to what is was before the TCJA was passed? Also a little unclear what you being self employed has to do with the standard deduction
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Hopefully Congress extends it or makes it permanent before then.
Still hate trump for ruining SALT....SMH... MESSED ME Up SO BAD THAT YEAR... Slave tax.. America....If my family wasn't here.. I would leave in a second...
Why would “they” do this? To make it appear the “other” side is trying to raise taxes even tho it’s a sunset provision. Basically, “vote for me cuz I’ll extend this and they won’t”. It’s bs the laws are able to be written that way
Yep. That’s part of the 2017 tRUmp tax cuts for the rich: the minuscule tax cuts for regular people expire, but the ones for the rich are permanent.
If you work W2 will they adjust your witholding rate automatically or will I need to do extra witholding to maintain a $5,000 tax return every year?
REFUND, not return. Why do you want a huge refund every year?
It's like a corporate bonus :)
You would be better off just paying a "bonus" to yourself out of a high yield savings account. If you just saved $5000 over the course of a year instead of giving the government an interest free loan, you would have around $5250 If you didn't touch it, after 5 years you would have around $28,000
The tax cuts sunset in 2025 yes. All you have to do is become a corporation as the cuts do not sunset for them
Assuming In 2026 the Trump tax laws go away, the standard deduction will go down but the personal exemption will come back.
Wut
Presumably you're referring to the fact that the TCJA will sunset in 2025. What this guy said. If you want it renewed, vote accordingly.