[Coronita]

[quote=SK in CV]If I was a state legislator, I wouldn’t frame it as screwing the fed. It’s benefitting the taxpayers of California without costing the state any revenue, or costing any currently funded organization. Taxpayers who are tax aware can save some money. Tax advisors score.[/quote]

Yes! Exactly.. it’s all is how the message is delivered. You don’t want to be directly confrontational with the fed.

[Coronita]

[quote=SK in CV]I think you skipped a step in your explanation. The qualifying charitable organizations should be organizations that are already getting state funding. Like schools. Arizona has some that aren’t currently funded by the state (like private schools, whose funding I personally strongly oppose, and would hate to see California include them in qualifying organizations). But most of the organizations are things the state is either already funding or reasonably could fund. I do not know whether the state reduces funding based on the amount of direct contributions, but there are some credits that are limited in total dollar amount.[/quote]

Fair enough…. Anyway, this is just a big game….Consider it a hobby, outside of when I’m driving. I just think it’s interesting how people’s fortunes can change simply by a few line item changes.

A few weeks ago, a few folks bent out of shape concerning the tax reform was pondering could could the state strike back at these tax reforms….

In principle, here’s a strategy that might work. Where are all you folks that want to effect change and want CA to screw the fed back? Are you going to help ask our state representatives to do something? SK is in Arizona, so his state already does something about it… He’s excused 🙂

[Coronita]

[quote=SK in CV][quote=flu]It would be nice if CA decides setup a “charitable donation” for the state coffer such that for every $1 donated to that charitable donation, you get a state tax credit of 90 cents against your state taxes. Doing that, would give the Federal government the middle finger as it kills two birds with one stone.

1. It gets around the $10k SALT limit…because instead of people itemizing the state tax deduction capped at $10k, they would itemize the “charitable donation”, which is currently not capped…..

2. Those of us paying AMT would have an extra bonus, because unlike state/property taxes that are AMT limited, charitable contributions are not limited under AMT…..So getting an $90 cents state tax credit for every $1 of charitable donation to the state, it would still probably work out better…..[/quote]

Great thinking there. Arizona has that, though it’s limited to about $4,800, among multiple credits. It’s dollar for dollar and some of them can even be paid up to the due date of the return. Unused credits, similar to over-payments of state taxes, can be carried over to future years.[/quote]

Lol… I think I found a new hobby. Besides cars, trying to understand taxes better…. Lol…

[Coronita]

….and now onto my next research topic. Minimizing my AMT tax hit with the college access tax credit…..

https://www.ftb.ca.gov/individuals/College_Access_Tax_Credit.shtml

Don’t know if it works out for me….And unfortunately I missed the 2017 deadline anyway..But might be useful in 2018…maybe….

Unrelated…

It would be nice if CA decides setup a “charitable donation” for the state coffer such that for every $1 donated to that charitable donation, you get a state tax credit of 90 cents against your state taxes. Doing that, would give the Federal government the middle finger as it kills two birds with one stone.

1. It gets around the $10k SALT limit…because instead of people itemizing the state tax deduction capped at $10k, they would itemize the “charitable donation”, which is currently not capped…..

2. Those of us paying AMT would have an extra bonus, because unlike state/property taxes that are AMT limited, charitable contributions are not limited under AMT…..So getting an $90 cents state tax credit for every $1 of charitable donation to the state, it would still probably work out better…..

[Coronita]

[quote=Oni Koroshi]I didn’t think there was a limit on the distribution amount but you can only change the beneficiary once per year.[/quote]

I think with the proposed tax reform concerning 529 plans, you are allowed to use $10k per year per student for K-12 private tuition. For college, I’m assuming it’s still unlimited.

There are some contributions limits too. The IRS rule of contribution limit is loosely defined as : “Contributions can not exceed the amount necessary to provide for the qualified education expenses of the beneficiary.”

https://www.irs.gov/newsroom/529-plans-questions-and-answers

Also, there is a maximum aggregated 529k balance per beneficiary set by each state (if any)… In CA, the maximum balance is $475k per beneficiary.

https://www.scholarshare.com/help/faq/?q=475

So if it’s K-12 + 4 years college + 2 years of grad school… I guess one could argue reasonable cost is 13*$10k (maximum allowed for K-12 per year) + $100×4 (assuming private college room and board) + $100×2 for grad school….which is greater than the CA balance limit of $475k/year. Also, I guess if you start withdrawing and using the funds from the 529k start at K, you probably won’t hit the maximum cap set by CA.

I’m not following why one would need to change the beneficiary often. One probably doesn’t want to anyway, as depending on the entire account balance, that might trigger the need to report the account amount over the allowed $14k per year per person ($28k if couple is gifting), and that amount over might count against ones estate tax exemption when you die….maybe…

Instead, you open a new account with a different family beneficiary and you rollover money from your first 529 account to your second, roughly $10k per year (the K-12 limit). Rolling money from one 529 account you own to another you own for a beneficiary “in the family” is also allowed with the current rules with no tax consequences, I believe…..

https://www.bogleheads.org/wiki/529_plan_account_transfers

You are allowed to rollover one 529 plan into another 529 plan. If a rollover conforms to the following conditions you will pay no tax on the transfer:

You are allowed only one rollover to another 529 plan per twelve month period for the same beneficiary.

You are allowed to rollover a 529 plan to a family member of the beneficiary. There is no restriction on the number of times this can occur per twelve month period.

The rollover must occur within 60 days of the distribution for the distribution to not be considered a taxable distribution.

You are also allowed to change the beneficiary of a 529 plan as long as the new beneficiary is a member of the family of the old beneficiary. There is no restriction on the number of times this can occur per twelve month period. If you change the beneficiary to a generation below the generation of the old beneficiary, there may be gift tax implications.

And if if you only rollover $10k/year per beneficiary, you also stay under the $14k gift rule…not to mention if you have trust issues with your reciprocating relative, you only jeopardize $10k/year per kid, not your entire balance of the account.

You rollover into a relative’s kid’s account that is in the family, and use that rolled over amount to pay for tuition now, indirectly taking a distribution on any sort of capital gains you have now (not a decade or so later when your kid is old and god knows what tax laws exist at that point)….The reciprocating parent can gift back money, subject to the $14k gift tax exemption per person per year. ($28k, per person per year if both spouse gifts)…That too is by the books…Anyone can gift anyone else $14k/year and not subject to gift tax. And there are no strings attached to the gifted money, so once you get it you can do whatever you want with it, including reinvesting it back into the first 529 account….then rinse and repeat for next year….

All this has been the big pitch for the 529k plan from all the fund managers for a long time now. Open an account for your grandkid, your niece, nephew,etc……Example: https://investor.vanguard.com/college-savings-plans/grandchild-niece-nephew

You could in theory do this right now, so long as your 529 distributions are qualified. The challenge right now is that 529 plans only apply to colleges, so that’s only 4-6 years where you can maximize the capital gains tax benefit…As stupid as the tax reforms are, changing the rules to apply to K-12 private tuition + college, that’s like 17-23 years of tax free distributions, which works great for folks that started a 529 plan years/decade ago, and hasn’t been able to take a distribution on any of the capital gains accumulated so far because we’re waiting for kid(s) to go to college.

Where else are you going to get tax free capital gains besides selling a primary home (which now the rules are going to change and require to you live more than 2 years???)

[Coronita]

[quote=harvey][quote=flu]Most “tax reform” is almost always a scam, from both sides. It’s politician trying to redistribute wealth among the middle class, leaving the poor and extreme rich alone. It happens from both parties.[/quote]

Lol, of course you have no facts to support that claim. You just repeat it because it fits with your “poor me” narrative.

A simple glance at the policies and legislation from the two parties will show how ridiculous that claim is. The policy differences on the estate tax alone proves you completely wrong.[/quote]

Harvey. I’m not the one complaining about tax increases . I think many of you are, lol….
I am laughing my ass off because it finally hit home for the rest of you that thought it couldn’t be you.

Personally, I don’t think things are going that bad, considering the country is burning. Lol….

Still waiting for either party to deal with foreign income earned abroad by corporations and repatriation….oh wait…never happened….because…well, we know why.

But it’s not like these tax increases are doom and gloom….you’ll get use to it.

With that, bye bye. I’ll bow out of the “my taxes are increasing because I need to subsidize Christian fundamentalists in the south” pity party that’s going on here on a couple of threads….

[Coronita]

[quote=harvey][quote=flu]I’m not so convinced all these tax increases, as annoying as they are, are really devastating.[/quote]

Not devastating, just a laughably transparent, multi-faceted scam:

– It was sold as middle class tax cut. It is not.

– It will massively increase the deficit.

– It will cause the healthcare system to be even more dysfunctional.

All for no benefit, except to the 1-percenters.

It’s certainly no better than what we already have, so what’s the point?

I already answered my question.[/quote]

Most “tax reform” is almost always a scam, from both sides. It’s politician trying to redistribute wealth among the middle class, leaving the poor and extreme rich alone. It happens from both parties.

[Coronita]

[quote=scaredyclassic]Ok then.

I need to become wealthy, now.[/quote]

You already are!….In the eyes of the IRS and our federal government….At least they sure are going to tax you that way!

Welcome to our special club, called the “you’re fucked tax club”… While you’re only a 1st year member, unfortunately in this club, membership is lifetime and irrevocable.

The next thing you’ll also learn is that even if the political winds change in 2018, and tax laws are “reformed” again, they’ll figure out a way to fuck you over again…..Same shit, different special interest political party….

[Coronita]

[quote=scaredyclassic]Ok.

Still this bill makes me despise republicans. I’m registered green, dislike many democrats, sometimes vote republican, but they have LOST ME FOREVER.

republicans can SCREW OFF for the foreseeable future for screwing calif.

This is just too much pure raw bullshit with an evil heart. dont tell me youre helping me when youre not.

That coupled with Roy Moore means the republicans can go to hell. If and when I see my Repub rep at the 4th of July parade I will be yelling at him from the sidelines if he votes for this. Piece of shit shakes people’s hands. Voting DIRECTLY against my interest???!! bullshit[/quote]

Weren’t you contemplating voting for trump, even half jokingly???? I mean seriously, a lot of us were screaming the shit was going to stink really bad and went even as far as vote for some we really don’t like either…..i guess it’s not so funny now that real money is involved….

[Coronita]

[quote=SK in CV][quote=flu]

I’m not so convinced all these tax increases, as annoying as they are, are really devastating.

[/quote]

I agree. Not devastating to any individuals, except in rare situations. Low income people can get hit with higher taxes. For those making $30K with 3 kids, losing $500 can be devastating. It could also be devastating to

The problem is not so much with itemized deduction changes. Outside sales people and W-2 truckers could get killed. I can think of a few others that will also.

A HUGE windfall for some wealthy and ALL uber-wealthy.

It could be devastating for what it portends, and what it holds for the economy down the line. It’s pretty similar to the tax cut from the late 20’s. Something bad happened after that.[/quote]

Agreed. Which is why I sort of chuckle at the irony here. I have a feeling the ones that are going to get hit the most, some of them probably voted for Trump and wanted this without really knowing about it…
(BG where are you?.. Lololol)

I mean how many senators actually read the 500 page tax reform before voting on it….just like how many read the actual ACA before folks voted on it. Maybe one of these days Congress can actually start doing things not out of spite for the other party. Lol.

I think the only positive.to come out of this is everyone this time feels a certain level of annoyance and financial pain such that next time, we.are a little more careful asking for “tax reform” or taxing more… And by financial pain, I mean almost Everyone.

Carenter, you were wishing for a repeal of prop 31 and felt people should be taxed more on their propety…. Well…wish granted… everyone is now…. Even folks with primary homes. Your property tax deduction is now capped. Lol…be careful what you wish for…

[Coronita]

[quote=SK in CV][quote=flu]
For rental properties, doesn’t mortgage, property tax, and just everything else count on as cost of running your rental? So none of that changes right?[/quote]

Yes, but. None of that changes, but it doesn’t mean the value of your properties are unchanged. If you own single family residences as rentals, they’ll sell based on what other single family residences are selling for, not based on ROI.

The value of multi-unit rentals may go up with this tax change. Lower taxes on passive income can increase ROI.[/quote]

I’m not so convinced all these tax increases, as annoying as they are, are really devastating.

First of all, for many people, mortgage interest deduction a primary isn’t going to be affected. The only ones affected are those new buyers that take out a mortgage larger than $500k. Old mortgages are grandfathered, right? I mean, are there many folks taking out jumbo loans these days? Maybe. I don’t know. Second, property tax is now capped at $10k. CA property tax is roughly 1%. So this only impacts people with an assessed value more than 1 million. I’m sorry, if you own a $1.5 million home, and are in a financial disarray because you can’t deduct and extra $5000 in property taxes for the entire year, and you weren’t already bending over in AMT, you got much bigger problems to worry about.

That leaves state tax deductions. Maybe I’m missing something. But lets just say someone’s AGI is $200k. State income taxes, 10%. So that’s an extra $20k taxable income versus last year… Tax rate of say 39% (which is probably much higher than what it is actually), that’s like $7800 extra taxes… Yes, it’s a painful check to write…But for someone with an AGI of $200k, is this really going to drastically affect one’s well being? I mean, these were the same arguments at one point said to some of us a few years ago too.

Again, don’t get me wrong, I think Trump is horrible, and the GOP has gone off a deep end, and this tax “reform” is ridiculous… I’m just not not seeing how this tax “reform” is going to be as doom and gloom as people make it out to be. It’s painful and annoying at worst imho.

So this might affect a handful of would be buyers who no longer have the budget to buy a SFH …. Ok, that sucks. Doesn’t this keep rental demand (and therefore rent prices) high? Doesn’t this create a floor for how far home prices may fall, given that if it’s cheaper to own than rent, people will buy?

And I’m only talking about these folks whose AGI is at this level… Not the folks that make much less, which I would agree get hit harder….No question about that.

[Coronita]

[quote=scaredyclassic][quote=flu]Are things really going to be that bad, if you factor in the ridiculous equity markets gain?

Yes, it will suck if you live paycheck to paycheck, have no investments, have no financial plan to invest…But I doubt many of us piggs are worker bees alone. Many probably are heavily invested too.

Does paying an extra few grand in taxes matter more than dow rising 400 points in a few days?

Just curious.[/quote]

theoretically, this tax plan significantly lowers your property values. itemizing loses value, flus real estate empire lises value[/quote]

For rental properties, doesn’t mortgage, property tax, and just everything else count on as cost of running your rental? So none of that changes right?

[Coronita]

Can you take advantage of the s-corp pass-through?

As far as what the state should do….Not saying it would work but….

1. CA/NY/WA/NJ can F with the other states…Create a commmerce commonwealth….

For example, a company such as Google HQ’d in CA can recall all the jobs back to California/Seattle/NY and leave red states, driving unemployment higher in those red states.

2. CA/NY/WA,etc state governments can levy transaction “fees” on on internet based transactions to all residence in these “commonwealth” states. Of course, if you’re a company that employees people within the commonwealth states you can apply to the commonwealth for “fee rebate” to get your money back. That way, it puts the tax burden on companies that choose to do commerce with consumers in CA/NY/WA, etc….

It’s similar how GST tax in Canada works for non-residence, except in reverse…. purpose of this tax/fee is to increase the cost of businesses that try to sell things residence in commonwealth states, driving their operating costs much higher and give incentive for businesses in CA and encourage businesses to have a presence in CA.

You see CA is looking at solving all these problems wrong… Taxing CA residence more is going to drive more wealthy people out of state. What CA should be looking at is figuring out a way to tax businesses out of state more…and either drive companies out of state out of business or give businesses out of state incentive to setup shop in CA and move jobs in.

Basically run a protectionist economic strategy at the state level similar to what Trump wants at the federal level versus foreign companies/countries, except the protectionism and tariffs would be directed at out of state businesses.

Given that we have people with higher income (for now), our consumers probably spend more…So out of state businesses may end up suffering more than CA businesses, even if other states not part of the commonwealth retaliate.

But let’ see exactly how loyal some of these “liberal leaning” companies really are interested in protecting some of these blue state interests…I have yet to see CA based companies or seattle based company recall jobs back to home states…..

Yes, I know. This idea sounds totally insane…But hey, we live in pretty insane times, so it probably just as crazy as seeing Trump in office. Write to your leading democrat state representative and propose this to them…Some of them might actually take this seriously…Lol….Taxing our way to prosperity…NOT!

[Coronita]

The lesson to learn is….

It’s easy to say “we” should be taxed more to support programs/people/things that “we” think should be supported (regardless of how those who actually bear the tax burden should feel)…so long as the “we” does not include “me”….

Welcome to the past 8 years for many of us tax- classified W2 “wealthy”.

Hey, I don’t like the tax “reform” any more than anyone else. Hopefully, many of you will now think twice about encouraging government to “raise taxes” on select groups of people to fund a program/group,especially when it’s for something you don’t really like….Aren’t you glad some of your taxes paid will now go to Christian Evangelists in the South who are interested in teaching good family values and religion in schools? (sarcasm)

There are always lessons to be learned from everything.

[Coronita]

[quote=FlyerInHi]Flu, I think Hillary however would have narrowed the deficit which is apparently no longer a consideration.[/quote]

Ah ha ha ha ha… I want whatever you are smoking…

Everyone in california now gets to pay more taxes to special interests and causes out in Randomplace, America when they really don’t want to…. Join the club. Some of us have been doing this for the past 8 years. I don’t think you’ve learned your lesson quite yet Brian.

[Author]

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