I am a single retiree. In the 2017 tax year, on an income of $80K, I took $16K in itemized deductions and a $4K personal allowance. That’s $20K. With a $12K standard deduction, my taxable income will increase by $8K, and my tax will increase by about $1700.
Well, there’s your explanation. How many people are like that? More than you would think.
“, I took $16K in itemized deductions and a $4K personal allowance. That’s $20K. With a $12K standard deduction, my taxable income will increase by $8K, and my tax will increase by about $1700.”
If you have 16,000 in itemized deductions, why wouldn’t you take those instead of the new $12,000 standard deduction?
Or is it because they are due to not being able to deduct the SALT?
If so, this will only affect people in a small handful of states. I think you need to work on your local government, it is the problem.
i agree about being strategic to avoid paying taxes. Being retired gives you a lot of options if you are making 401k withdrawals , but those not there yet still have a few. Like IRA contributions. We will be doing that this year, probably not so necessary next year.
Please do some homework or go see a tax advisor.
“my taxable income will increase by $8K”
Not with an additional $10,000 SALT deduction. Your taxes would DECREASE.
Sounds like my widowed mother-in-law, she is in similar income bracket and figures her taxes are going up as well. How can you screw up a tax cut? Ask the GOPE, they screw up everything they touch.
Although I don’t know your exact situation, what’s stopping you from continuing to itemize the 16K? Then, there is only a 4k difference (instead of the 8k you mentioned), and with the 3% lowering of the tax brackets it seems you would still come out ahead (or at least break even).
We are in a similar situation, but once I actually sat down and crunched numbers, we basically break even or ahead by $100-200.
You correctly point out that the winners and losers in the tax bill have to do with itemized deductions. Since we don’t have a business and cannot take advantage of the lower business taxes. In my case my mortgage and state taxes are under the limits so I can still deduct them. My big deduction has always been medical expenses. That was not changed (except for a lower threshold) so I can still use all my itemized deductions. This amounts to 41 K which exceeds the 24 K my wife and I will get when I cannot itemize. So for the near term I get a lower tax because of the lower rates.
I also benefit because our son will prosper in the lower corporate economy even though he did not support Trump.
The truth is that taxes always hit some more than others. The government should get out of the business of helping us decide what to do with our money. I personally would prefer a flat sales tax instead of an income tax. But for now I will enjoy the extra money and continue support for Trump.
Why are you retired and living in NY? The NY state, local and real estate taxes were a huge deduction. Those days are gone. Democrats hardest hit.
IMO you should consider moving to a no-income tax state like FL, TX or WA and use the standard deduction. You’ll probably still pay more than you did with the NY state tax deductions but the savings in state taxes should make up for it.
The SALT deduction was a huge sweetheart deal for Blue states to offset their high state taxes with reduced federal taxes. Those state politicians’ greed and disregard for the citizens will be exposed.