The itemized deductions Trump plans to eliminate

[jmowreader]

One of the ways Trump is trying to make his rich man's tax cut balance out is by eliminating all itemized deductions except for mortgage interest and charitable contributions.

I have a Schedule A in front of me, and these are the deductions from it that he's going to get rid of:

Medical and Dental Expenses

Taxes You Paid - this is how Trump is punishing the blue states

Casualty and Theft Losses

Unreimbursed employee expenses

Tax preparation fees

Other expenses like investment fees and safe deposit boxes.

Miscellaneous deductions:
Gambling losses only to the extent of gambling winnings
Casualty and theft losses of income-producing property
Loss from other activities
(The estate tax is on here too, but he plans to eliminate that)
Deductions for amortizable bond premiums
(This next one is right off the IRS' book) Ordinary losses attributable to a contingent payment debt instrument or an inflation-indexed debt instrument; for example, a Treasury Inflation-Protected Security. (I don't know what this is either. If you have a bond that generates this deduction, your broker explained the tax break to you before you put down your cash.)
Deduction for repayments of amounts under a claim of right if over $3000. (This is explained in IRS Publication 525.)
Certain unrecovered investment in a pension
Impairment-related work expenses of a disabled person.

[DBoon]

1. K&R

knr

[Angry Dragon]

2. the wealthy need more money

it is a sound plan for that

[TeamPooka]

18. swap out "all" for "more" and you're getting closer.

[Wellstone ruled]

3. Said this in January,

we people that are the 47% will pay the freight for any new Tax bill proposed by the GOP. Sorry for that prediction coming true.

[Ilsa]

4. I heard the personal exemption would go away under his plan.

I don't get child tax credits for my kids, but we supply more than 50% of their living expenses. I'm going to gear up with some other families and start a charitable organization for each other's kids. That way, we can write off the gifts to the org that will help pay for their uncovered miscellaneous expenses.

[PoindexterOglethorpe]

7. That's actually a brilliant idea.

[Ms. Toad]

23. Don't try it without consulting an attorney well-versed in tax code.

Generally pass through donations set up to avoid the law are treated the same as if you gave the money directly.

[PoindexterOglethorpe]

26. Yeah, I'd hope the poster thinking of this does that.

I'd say both an attorney and a good accountant should be in on the planning.

[Cary]

27. Reciprocal gifts

Nope. That won't work.

[PoindexterOglethorpe]

28. Start a charity, fund it,

and set it up so the money is only distributed to the recipients you want to get the money?

I know almost nothing about charitable foundations, and absolutely nothing about how to set one up and what sorts of rules and regulations apply. I do believe that charitable foundations are obligated to give away a certain percentage of their money every year. At least I believe they are.

[Cary]

31. Form 1023

And you have to file with your state's attorney general.

[former9thward]

20. The personal exemption is not going anywhere.

And there is no proposal like that. Things are really getting wild and silly on the internet. Most of the deductions mentioned in the OP are not proposed to end either. Anyone with the ability to google can get all the facts and then decide for themselves.

[creeksneakers2]

32. Google where?

I have a link here:

The 'doubled standard deduction' in the GOP tax plan is a lie

http://www.businessinsider.com/trump-tax-plan-doubled-standard-deduction-2017-9

I don't know how anybody can say for sure what's in or out since there isn't a bill yet.

[former9thward]

40. Well the OP was certain what was in it.

That was the whole basis of the OP. Your link goes to a poorly written and speculative article. It is all over the place with its math and assumptions -- which may or may not be true. It is a typical article by someone who wants to confuse people who don't know how income tax works.

But in the end you are right. There is not a bill yet and the devil is always in the details.

[jmowreader]

42. The OP read Trumps prospectus

On Seeking Alpha is an article about Orangeman’s tax plan. In it you will find a link to the actual document Trump’s people have put out, and it is clear: only mortgage interest and charitable deductions will be allowed.

I get the feeling Trump’s Fundamentalist advisors would prefer the mortgage interest deduction to go away and church contributions become refundable credits, but there would be riots in the streets if he did that...mostly involving fundies. “You never said non-Protestant religions could have it too!”

[creeksneakers2]

46. Its not speculative

Here is the leaked Republican plan:

https://www.axios.com/heres-the-gop-tax-reform-plan-2490159611.html

See page 4.

[former9thward]

48. Page four does not give any tax details for a real life taxpayer.

And the linked article I commented on doesn't either. This all means nothing until you apply it to real life situations. Neither does that.

If you think it does then does your tax go up or down and why?

[creeksneakers2]

49. Here's a real life situation

Trump is taking away the personal exemption. They are lying about doubling deductions. Do you need an example to understand this?

Taxes go up for people who lose deductions in exchange for a bogus promise of bigger deductions elsewhere.

[former9thward]

50. Yes I need an example.

My taxes would go down. Maybe I am the only person in the country that would have their taxes go down. Now I do not support or oppose legislation based on what is happening to me personally. And especially in this case where there is NO BILL that has been introduced, let alone hearings, let alone amendments and everything else that always happens with tax legislation.

[marybourg]

53. Ummm, no. That would be tax fraud.

Was ruled on a long, long time ago.

[underpants]

5. Some of those are going to hit small businesses hard

Not good.

[jmowreader]

9. Some will hit large businesses hard

He also wants to eliminate the deductibility of interest businesses pay on loans.

This is going to hurt: any business that runs on OPM can deduct the interest they pay. If Trump gets rid of that deduction, the expense will cause higher prices.

[Sgent]

16. That's actually a good one

there is a lot of academic literature about it.

Having tax deductible debt, but taxable dividends (like we do now) favors loans vs equity, causes companies to more highly leverage themselves, and puts them in greater danger of bankruptcy in a bad economy.

Companies will just have to issue more stock rather than new debt.

[ProfessorGAC]

38. It Also Encourages Hyper-Consolidation

The added leveraging for huge mergers on too of huge mergers as discussed on John Oliver last Sunday
Tamping that a bit is good for consumers as well!

[jmowreader]

43. It would discourage buying new equipment, too

If my company buys the new forklift it needs, we sure as hell aren’t going to take it out of petty cash. And as with homeownership, many businesses factor the deduction into their affordability calculations.

[MichMan]

6. Haven't been able to itemize for years

Don't ever come close to the standard deduction.

Middle class married with no kids and zero deductions to itemize.

[unblock]

8. how is it that the media insists on calling this a tax cut?

i know, i know, the media is deep in the tank for the right wing.

but better removing many deductions and raising at least the 10% rate to 12%, this is looking like a tax hike more than a tax cut.


obviously, it's both -- a tax cut for the rich, a tax hike for the rest of us. at a time when there's no recession, there's a big deficit, and the rich already have too much of the nation's wealth.

truly insane.

[former9thward]

21. Doubling of the standard deduction.

That will cut taxes for many.

[unblock]

22. Yes ymmv and there will be winners and losers

But the media spins it like it's a tax cut and it's not, it's only a cut for certain people.

In particular, many homeowners and people who live or work in states with income taxes will lose out.

Some renters who fall in probably narrow income range where they benefit from double standard deduction before losing back to the higher tax rate may benefit as well. Will see when we get details.

In any event, it will be peanuts at best for most of us if it's a cut at all.

[roamer65]

34. That is the one part I do like of it.

I would also like to see the personal deductions for children limited to a maximum of 2. With nearly 8 billion people on this planet, we do NOT need tax policy that encourages larger families.

[former9thward]

41. Neither party will ever go for that.

"They are hurting the children" ads would be all over the place.

[jmowreader]

44. They plan to limit personal deductions to zero

I have this feeling a lot of Trump’s few remaining friends are Quiverfull. They will NOT be happy to learn Trump plans to send their taxes through the roof by killing exemptions and medical deductions.

[moriah]

52. That only hurts poor families more.

Last edited Fri Sep 29, 2017, 07:56 PM - Edit history (1)

Poverty leads to not being able to afford things like gas for trips to the doctor and pharmacy for birth control or the week off to recover from a tubal when you'd prefer.

Which often leads to more kids.

We're already punishing the poorest whose parents are disabled by limiting the family check no matter how large the family. Try taking care of a disabled husband, your kids, keeping a job, and trying to make sure you never forget a pill when the gov won't pay for your husband to be the one to get snipped so you don't lose a week of pay.

Edit to add: sorry if I sound harsh. I'm just saying the truth as I've seen it happen -- and a friend's last birth was too complicated from her preeclampsia for them to do a tubal immediately after (had a Cesarean been required they said would do it then because they'd already have had her open anyway, but she was barely able to keep him in to 35 weeks and no c required). 50% of women who request sterilization after a birth are denied the procedure for many reasons, their reason in her case was at least somewhat medically sound.

[jmowreader]

55. No, it will RAISE taxes for many

Under the current tax system:

Standard Deduction:
Single: $6350
Married Filing Jointly: $12,700
Personal Exemption: $4,050 per person listed on the return - you get an extra exemption for each person who is 65 or older, and each person who is blind...and they're cumulative, so your 67-year-old blind mother gets three exemptions.

Under Trump's plan:

Standard Deduction:
Single: $12,000
Married Filing Jointly: $24,000
No personal exemptions; one exemption for Single and two for MFJ are rolled into the standard deduction. Anyone who itemizes is SOL.

If you remove the personal exemption amount from his standard deduction, here are the real increases:
Single: $1600 increase
MFJ: $3200 increase

Factor in the removal of personal exemptions for your kids and a two-percent increase on your first $9325 in taxable income...if you or I see any tax decrease, it will be very, very small.

[roamer65]

35. It's more of a tax shift.

Those who use the standardized deduction will see a tax cut. Those who itemize will probably see a tax increase through loss of deductions.

The rich will benefit greatly from the estate tax changes. Too much so.

[WinkyDink]

37. "truly insane"---Only if one doesn't know the purpose!

[Left-over]

10. Raising your taxes!!!!!

While the rich bask in the glow of even more wealth, working people's taxes go up.

[Johonny]

11. This will win the Dems the house in 2018 if it passes

The only thing Blue state rethugs vote for is low taxes and this will raise their taxes.

[fleabiscuit]

12. Until all forms of compensation is treated as regular income, taxes are going to be a scam. nt

[ProudMNDemocrat]

13. I run a Business out of my home. How will this affect me?

I run my Alterations and Custom Period Clothing business out of my home. I itemize everything from mi,age to and from events where I promkte my husiness, sewing machine repair, what I spend on Fabrics and Supplies, postage to clients for shipping costs, Hotels, Meals, charge card fees, hours, etc.

When my husband does the Taxes, we are able to write off a portion of the Mortgage, Utilities, Property Taxes, Car maintanance, lawn care, etc. I wonder how this will affect Home based businesses as well.

[Kensan]

15. If you run a business....

You should be claiming those expenses on a Schedule C, not itemizing them. The use of a dedicated portion of your home for business purposes is a separate calculation. A portion of the expenses you listed will also be claimed on your Schedule C.

None of the proposed changes I have seen will impact your business operations, other than the proposed change in tax brackets in general.

[ProudMNDemocrat]

19. I do that already as you stated.

[jmowreader]

45. Because we havent seen the bill, we dont know

I’d expect enough things will be eliminated from the list of allowable deductions (business use of a home at the top of the list) your taxes will go up.

[Kensan]

14. There's going to be a lot of lobbying going on....

A rich client of mine loves to go to Lake Tahoe and Las Vegas to blow off steam. He gambles like a madman, and I have the casino win/loss reports to prove it. I emailed him that his beloved Republicans were going to possibly subject his winnings to income tax, and he would have no offsetting deduction for his losses. He almost had a heart attack. I had to inform him that medical expenses are also on the chopping block, so he better not go into cardiac arrest.

He can take a joke, but it's really not a laughing matter. This tax reform plan is even more brazen than W's tax cuts. The tax consequences of these changes are going to crush the middle class, and they don't even see it coming. Not to mention, in a few years the decrease in revenues will have these very same Republicans screaming for more cuts to public sector programs that will be more needed than ever. Cue the sell off of public lands/resources and cuts to any programs that actually help people.

I will say, it will be interesting to see how the executives of our multinational companies like not being able to manipulate the timing of foreign earnings repatriation. They will throw a hissy fit, but there will be some special tax rate put in place for the next few years so it won't hurt their financials too much. And the executives will have their nonqualified stock option plans to fall back on.

[Sgent]

17. With

Sheldon Adelson (major casino magnate) being one of the major R finders, the gambling write-off will stay. They may change the 1040 to say "net gambling winnings" rather than all gambling winnings, and keep it off Schedule A. This would be a good thing for your client.

[Yo_Mama_Been_Loggin]

24. Never mind

that the blue states already subsidize the red states.

They're continue to even more so.

[LiberalFighter]

25. The plan is also to raise the lowest tax bracket from 10 to 12 percent on taxable income.

[still_one]

29. People have already hurt people when Congress cut medical and dental deductions cut by only

allowing it for amounts that exceed 10% AGI. Similar things for Casualty and theft losses. Now they want to completely eliminate those deductions completely for those that need it the most. Absolutely insane.

[nocalflea]

30. So when do the trickle down benefits from the Reagan era kick in ?

Been waiting a loooonnnnnggggg time.

[creeksneakers2]

33. Don't forget

They are getting rid of the student loan interest deduction too.

[Bluepinky]

36. I'm so glad Trump is getting rid of the last deduction on this list.

Disabled people get far too many benefits already. They shouldn't expect any incentives for holding a job, the "job creators" need the money more.


Trump has always been so supportive of disabled people.

[Eliot Rosewater]

51. Medicare and Medicaid are going bye bye, disabled people will be ....

i cant complete the sentence, especially if you are disabled.

I say this stuff to make a point, but I dont want to scare you.

Trump hates disabled people, he is on record they make him uncomfortable and he believes that if you are disabled it is your fault.

[Bluepinky]

56. I remember how he mocked a disabled reporter at one of his rallies.

He's a disgraceful person.

[Drahthaardogs]

39. Most of these don't matter for the middle class

Medical and dental sound good but you don't get to claim them until you spend around $7,000.

[OldHippieChick]

47. Medical and dental is a big deal to those on the individual market.

They already pay more than employer-sponsored plans and now they cannot deduct their premium payments and expenses? Wow, this is just another way to punish those who are already being punished. Guess you can only bitch once eh?

[DK504]

54. This need to be leaked to all the rubes.

This will affect ALL of them..All of them take ALL of them deductions. This will devastate the middle class.