GOP tax plan musing...capping 401k contributions at $2400 year

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Fern

Elite Member
Sep 30, 2003
26,907
173
106
Section 1309 removed alimony deduction.

That makes no sense. The payer deducts alimony because the recipient includes the alimony on their tax return.

Thinking about converting your Roth to a traditional IRA? Do it before December 31 because that goes away under Section 1501.

Do you mean converting regular IRA into Roth? I.e., the other way around?

I don't recall any way to convert a Roth into a regular IRA. Nor would that make any sense. (There are reason to cease contributions to your Roth and put them in a regular IRA, but that's different than a conversion.)

Fern
 
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sactoking

Diamond Member
Sep 24, 2007
7,576
2,810
136
By removing the personal exemptions and adding this, they are essentially killing people like me from claiming my 17 and older children, in college, on taxes. Even getting the $300 credit, if possible, would be far less than a $4050 income exemption at our current tax rate. I haven't read enough but wouldn't be surprised if they didn't scrap the college credits too!
They didn't kill the college credit but they did modify it.
 
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Jhhnn

IN MEMORIAM
Nov 11, 1999
62,365
14,681
136
I mean this tax plan is shitty, but wtf with some of those deductions? Moving expenses? Alimony? What's the reason these particular groups should have special treatment written into the federal tax code? are these the groups in most need of help? Is this the most effective way to provide it? Does it generate a positive return?


At some point when "everyone" gets a deduction of 3% or whatever can we finally agree to remove them all and lower taxes by 3% instead..? This is what happens when everyone just go "mememe!" and gets their own little carve-out. The reason the US has more tax preparers per capita than most countries have nurses.

You miss the central point. Repubs intend to shift the tax burden down the scale from the wealthiest onto the rest of us. The Rich are already getting richer all the time, unlike the rest of us. We've allowed them to lead the economy ever since Reagan & here we are, thanks to their efforts. Should we really grant them greater rewards?
 

Engineer

Elite Member
Oct 9, 1999
39,230
701
126
You miss the central point. Repubs intend to shift the tax burden down the scale from the wealthiest onto the rest of us. The Rich are already getting richer all the time, unlike the rest of us. We've allowed them to lead the economy ever since Reagan & here we are, thanks to their efforts. Should we really grant them greater rewards?

Bootstraps and the fickle trickle......
 

sactoking

Diamond Member
Sep 24, 2007
7,576
2,810
136
That makes no sense. The payer deducts alimony because the recipient includes the alimony on their tax return.
26USC215 covers the deductibility of alimony, basically says the payor deducts it if the payee pays taxes. Section 1306 repeals 215 completely, so I guess it's double-taxed.



Do you mean converting regular IRA into Roth? I.e., the other way around?

I don't recall any way to convert a Roth into a regular IRA. Nor would that make any sense. (There are reason to cease contributions to your Roth and put them in a regular IRA, but that's different than a conversion.)

Fern
26USC408A(d) looks like it allows Roth contributions to be recategorized as traditional contributions during the same calendar year under paragraph 6. That will be repealed.
 
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Engineer

Elite Member
Oct 9, 1999
39,230
701
126
26USC408A(d) looks like it allows Roth contributions to be recategorized as traditional contributions during the same calendar year under paragraph 6. That will be repealed.

So the current year Roth contributions can be changed to a regular IRA contribution with tax deferral for the contributions of the CURRENT year but the whole Roth can't be converted to a regular IRA, correct? (At least that's the way I read what you're listing). If so, I agree with Fern that I thought that it was meant that you could convert a complete ROTH into a regular IRA.
 

Fern

Elite Member
Sep 30, 2003
26,907
173
106
26USC215 covers the deductibility of alimony, basically says the payor deducts it if the payee pays taxes. Section 1306 repeals 215 completely, so I guess it's double-taxed.
That's crazy. I don't think it'll survive the Joint Committee. Double taxation has long been a 'no-no'.



26USC408A(d) looks like it allows Roth contributions to be recategorized as traditional contributions during the same calendar year under paragraph 6. That will be repealed.
Yeah, that's just a bit of flexibility gone. I.e., you could change your mind right up until the due date as to whether your contributions were to a Roth or regular IRA (given appropriate action by trustee).

TX,

My remarks above in bold.

Fern
 

sactoking

Diamond Member
Sep 24, 2007
7,576
2,810
136
I didn't see it in the confirming language but it's possible the intent is to make alimony non taxable to the recipient.
 
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Jhhnn

IN MEMORIAM
Nov 11, 1999
62,365
14,681
136
I didn't see it in the confirming language but it's possible the intent is to make alimony non taxable to the recipient.

Which makes it taxable for the payer, usually a white male, and likely at a higher rate than the supported spouse would pay...

Donald's base is gonna love it....
 

obidamnkenobi

Golden Member
Sep 16, 2010
1,407
423
136
You miss the central point. Repubs intend to shift the tax burden down the scale from the wealthiest onto the rest of us. The Rich are already getting richer all the time, unlike the rest of us. We've allowed them to lead the economy ever since Reagan & here we are, thanks to their efforts. Should we really grant them greater rewards?
No I didn't miss it, I said this is a shitty plan. But those endless lists of social engineering tax deductions are pretty dumb too. Removing them and lowering the base rate for middle class should be a goal. And many deductions benefit higher earners most anyway. Of course GOP instead lower the rate for the richest which is the problem.
 
Nov 8, 2012
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I agree with everything but two things. First, I think that chart is terrible because it lumps people from 40k through 115k! That’s a huge difference and I bet the majority of the MID is taken by the top 20% or so of that bracket. That’s just semantics though I guess, as we both agree the MID is primarily for the wealthy.

Second though is that the Trump tax cuts as we currently (vaguely) understand them do cut taxes modestly for most of the middle class, but raise them significantly for the upper middle class, while cutting them hugely for the rich. Funny thing is that the people who get their taxes raised from his plan are probably heavily represented on this board, haha. I know they would screw me.

Fair enough. Though, the 40k - 115k probably does in fact cover the ACTUAL middle class, right? I would wager that is probably from the bottom 25% hosuehold income to the top 25% household income... so roughly the middle 50% right? I dunno, too lazy to fact check myself there of laziness

I will say that on the face of it, the upper-class (I'll just paraphrase "upper class" with "top 10%) will likely pay more as a whole. However, as someone in the top 10% myself, I would actually be paying less since I take the standard deduction instead of relying on tax deductions that are based on how expensive of a home I choose (mortgage interest AND property tax deductions).

So really, if anything, this will save me a decent chunk, i'll be honest there.

I also agree with Trump a bit that we need to expand the child tax credit substantially - and if anything increase the buffer for child care credit as well. We have a huge issue where the middle and upper classes aren't reproducing because it's such a high cost, so that simply leaves us with nothing but the lower class reproducing. Idiocracy in the making.
 
Nov 8, 2012
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$10K state and local tax deduction cap is a tax hike on middle class, so is mortgage deduction cap. All to cap pass through taxes and eliminate estate taxes on Trumps.


Dont do something useful like educate yourself on our tax code or understanding what the middle class is now.... yes...yes... remain ignorant based on your cognitive bias of loving and using the deduction
 
Nov 8, 2012
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The bolded above is true but at the same time, if they eliminate personal exemptions, many middle class people, especially those that have children and use the MID, will be screwed most likely.

See my last post, or what I like to call "facts". Quit shoving your head up your ass acting as if YOU are middle class with a cushy 200k+ chousehold income
 

Jhhnn

IN MEMORIAM
Nov 11, 1999
62,365
14,681
136
No I didn't miss it, I said this is a shitty plan. But those endless lists of social engineering tax deductions are pretty dumb too. Removing them and lowering the base rate for middle class should be a goal. And many deductions benefit higher earners most anyway. Of course GOP instead lower the rate for the richest which is the problem.

What we think is dumb doesn't really matter. We have the way it is & the way Repubs want to make it. They have zero intention to coming around to your way of thinking, or mine, for that matter. The rest of it is like talking about unicorns.
 

obidamnkenobi

Golden Member
Sep 16, 2010
1,407
423
136
What we think is dumb doesn't really matter. We have the way it is & the way Repubs want to make it. They have zero intention to coming around to your way of thinking, or mine, for that matter. The rest of it is like talking about unicorns.
Meh, whatever bullshit I write here is as likely to become tax law as that miscarriage republicans are trying to force through.
 

Jhhnn

IN MEMORIAM
Nov 11, 1999
62,365
14,681
136
Fair enough. Though, the 40k - 115k probably does in fact cover the ACTUAL middle class, right? I would wager that is probably from the bottom 25% hosuehold income to the top 25% household income... so roughly the middle 50% right? I dunno, too lazy to fact check myself there of laziness

I will say that on the face of it, the upper-class (I'll just paraphrase "upper class" with "top 10%) will likely pay more as a whole. However, as someone in the top 10% myself, I would actually be paying less since I take the standard deduction instead of relying on tax deductions that are based on how expensive of a home I choose (mortgage interest AND property tax deductions).

So really, if anything, this will save me a decent chunk, i'll be honest there.

I also agree with Trump a bit that we need to expand the child tax credit substantially - and if anything increase the buffer for child care credit as well. We have a huge issue where the middle and upper classes aren't reproducing because it's such a high cost, so that simply leaves us with nothing but the lower class reproducing. Idiocracy in the making.

Idiocracy? Please. Inheritance of vast wealth leads to arrogant & incompetent spoiled rich kids running the country. Guys like Trump, come to think of it.
 

Engineer

Elite Member
Oct 9, 1999
39,230
701
126
See my last post, or what I like to call "facts". Quit shoving your head up your ass acting as if YOU are middle class with a cushy 200k+ chousehold income

LOL...you have no idea of my household income. It doesn't reach the $100k mark, much less $200k but don't let your assumptions get in the way of my personal facts. Although I did hit $119k in 2005 when I was still getting paid overtime and worked 1,500+ hours of OT at 1.5 times hourly rate.....with my nice cushy salary and job.

Edit: Most of my 401k contribution was returned to me and taxed in 2005 as well because I was considered a 'highly compensated employee'....overtime or not.
 
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Jhhnn

IN MEMORIAM
Nov 11, 1999
62,365
14,681
136
Meh, whatever bullshit I write here is as likely to become tax law as that miscarriage republicans are trying to force through.

We shall see. Their biggest donors are beating the tax cut cash out of 'em, bet on that. If you won't play ball they'll cut your funding & primary your junkie ass by funding the Teahad in your state or district, fool.
 
Nov 8, 2012
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Section 1307 of the bill repeals the deduction for tax prep services. While not huge it's a flick in the nuts to the middle class.

Explain.

You think the rich don't pay some bus-boy accountant to do their returns? If anything this hits the dick of the ultra-rich harder, because with their complex loopholes I guarantee they are paying an expensive accounting firm way more than people are paying $50-300 for some H&R Block level tax return software/employee. Get the fuck out with this whole "It's against the middle class!" for everything initiative
 

Jhhnn

IN MEMORIAM
Nov 11, 1999
62,365
14,681
136
Explain.

You think the rich don't pay some bus-boy accountant to do their returns? If anything this hits the dick of the ultra-rich harder, because with their complex loopholes I guarantee they are paying an expensive accounting firm way more than people are paying $50-300 for some H&R Block level tax return software/employee. Get the fuck out with this whole "It's against the middle class!" for everything initiative

Well, the ultra Rich won't be paying for complex instruments to avoid estate taxes. I'm sure that's expensive.

https://slate.com/business/2017/11/...state-tax-is-even-grosser-than-you-think.html

I'm sure taxes on what they pay to accountants won't even begin to catch up to the increased after tax income received at the top of the pile.
 

Jhhnn

IN MEMORIAM
Nov 11, 1999
62,365
14,681
136
That bit about changing the tax liability for alimony will really chap some hides in the white male Trump base. Not only do they have to pay the greedy & hateful Ex-wife but they have to pay her taxes, too... It'll raise the hackles on guys who aren't even affected...
 
Nov 8, 2012
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Which makes it taxable for the payer, usually a white male, and likely at a higher rate than the supported spouse would pay...

Donald's base is gonna love it....

Don't let facts get in the way of your illogical thought process:

 
Nov 8, 2012
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You mean the Republican estate tax cut?

Quick! Deflect! Deflect to irrelevant topics!

Stawmen... strawmen everywhere. You will see in my post above that I don't condone repealing the estate tax on the prospect of fucking over the upper-middle class with their deductions. But continue with your strawmen and cognitive dissonance without even reading my prior posts you dimwit.
 
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