Tax time.....

[fintstone]

I have not done my taxes yet...but my income has risen...and I already am getting killed both state and Fed.

We will probably make our house in NC our residence to avoid taxes when I retire (as most of our retirement income is state tax free there) except proceeds from my rentals. Will be able to spend at least half our time there then (unless we decide to spend half our time in NV or FL where it is warmer and no state taxes.

[jwasbury]

Originally Posted by fintstone

Beats me...if you are talking about Fed taxes (not state). Looks to me like it would be hard to actually pay more on the same income:

fint, you can't look solely at the rates, which were absolutely lower. The other piece of the equation is that deductions have been limited...particularly deductions for taxes paid (state income taxes and property taxes). So while the rates are lower, and your gross income can be same as previous years, your taxable income may be higher. those of us in the highest tax states like NY/NJ (where its "normal" to pay 20k in property taxes per year) are all going to pay more under the new law, even if our income is static.

[GH85Carrera]

The big change for me was now I can't deduct one cent of my home office for my business. And I "get" to pay taxes on the investments I have in the stock market. Every time a stock was sold and there was a profit to reinvest, I have to pay income on that, and not one penny was ever disbursed to me, 100% of it was re-invested. It was all "just paper" and nothing I can spend, yet since I am the "rich middle class" I get to pay more taxes.

I don't have a paycheck at all. As a business owner I just take a draw on the company and pay estimated quarterly taxes.

I think the new tax laws were just the CPA full employment act with a different name.

In the end, I suspect my taxes will remain roughly the same, but I will be forced to pay my CPA a grand or more to sort through the company books and figure out my exact taxes.

[fintstone]

Originally Posted by jwasbury

fint, you can't look solely at the rates, which were absolutely lower. The other piece of the equation is that deductions have been limited...particularly deductions for taxes paid (state income taxes and property taxes). So while the rates are lower, and your gross income can be same as previous years, your taxable income may be higher. those of us in the highest tax states like NY/NJ (where its "normal" to pay 20k in property taxes per year) are all going to pay more under the new law, even if our income is static.

I made the assumption...because I know these folks we are discussing are not wealthy and do not live in a high tax state. I would expect those in a high tax state to pay more...by design. It was a subsidy that was intentionally reduced to level the "playing field". Those states/localities need to rethink electing folks that waste their money/buy votes.

Tough break for those that live there. They really need to rethink whom they elect (and maybe consider relocating like so many others).

[Porchdog]

Here I am in the "upper middle class" on the edge of one of the most affluent parts of PA.

We work for paychecks. Our property taxes aren't so high. We have investments but much of that is 401K/IRA. Our properties are paid for and we don't have any business. Under the old rules it was year by year whether we itemized deductions.

The current tax plan is a significant savings for us - just due to the higher standard deduction and lower rate.

[fintstone]

Soon, much of NY/NJ will live in NC or FL and Much of CA will be in NV or Idaho.

[fintstone]

As long as the top 1% of taxpayers pay 43% of Fed taxes...they will relocate to save on taxes. Especially if they live in a place where the weather is poor or the cost are high. It is like where I live much of the time. Cold winters and poor services for my $15-20K per year in state/local taxes. I can get the same or better in a warmer climate and spend that money on something else.

[biosurfer1]

Originally Posted by fintstone

Soon, much of NY/NJ will live in NC or FL and Much of CA will be in NV or Idaho.

It's so crazy you mention that as just yesterday, we had (yet another) retirement party for a co-worker and that was the third one in a row where the person retiring is moving to Nevada (2 Reno, 1 Henderson) and they all cite taxes and cost of living.

The strange thing is all 3 have most of their family in California, and while moving when you retire isn't uncommon, I feel like moving away from family is.

[jwasbury]

Originally Posted by fintstone

They really need to rethink whom they elect

agree 100%. NJ ranks near the top of the list for paying taxes into the Fed, and near the bottom of the list for how much Fed dollars come into the state. To me, this is indication that that our legislators at the Fed level are among the WORST performers of the bunch. Personally didn't vote for a single one of them.

As for relocating, I'd consider relocating to SE PA (near Porchdog)... Nice area and a slower pace vs. the NYC metro zone. Still pretty spendy in terms of tax burden relative to the rest of the USA, but still much less than the concrete jungle 80 miles to the east.

[fintstone]

Originally Posted by biosurfer1

It's so crazy you mention that as just yesterday, we had (yet another) retirement party for a co-worker and that was the third one in a row where the person retiring is moving to Nevada (2 Reno, 1 Henderson) and they all cite taxes and cost of living.

The strange thing is all 3 have most of their family in California, and while moving when you retire isn't uncommon, I feel like moving away from family is.

All of my family is disbursed (employment) and in different states (from us)...so I would have to pick one. In retirement preparation, I have purchased a vacation home near some relatives and will likely have at least one more near others. I am thinking two or three smaller homes vice the current large one w/rarely used vacation home...with the primary one in a tax friendly state/locale.

FL would be nice to winter in...especially if below the frost line so it is like summer in the winter (like in Naples) and maybe the cool mountains of NC (like Asheville) in the summer.

Another option is have a house where one child lives and a vacation house near the other (since I only have two kids and both must go where their work is). I will be having to decide soon...but nothing is ever final. We can always change our mind if one place gets boring.

[fintstone]

Originally Posted by jwasbury

agree 100%. NJ ranks near the top of the list for paying taxes into the Fed, and near the bottom of the list for how much Fed dollars come into the state. To me, this is indication that that our legislators at the Fed level are among the WORST performers of the bunch. Personally didn't vote for a single one of them.

As for relocating, I'd consider relocating to SE PA (near Porchdog)... Nice area and a slower pace vs. the NYC metro zone. Still pretty spendy in terms of tax burden relative to the rest of the USA, but still much less than the concrete jungle 80 miles to the east.

PA is too cold for me. As I get older, even the cold/dampness of even VA or NC seem too much for me...much less farther north. Nice places to visit (when the weather is nice in spring or fall), but... My joints ache and I seem to never go outside unless I have to.

Maine is also cool/beautiful in the summer.

[wdfifteen]

Originally Posted by KC911

Nope....same fixed income for years now...both parents. They will pay more in total taxes....nothing changed for them except the new tax code.

Changes in allowed deductions.

[KFC911]

Asheville area in the summertime.....yep

I'll check the locks fer ya and be a sqatter in transitional months....

[KFC911]

Originally Posted by wdfifteen

Changes in allowed deductions.

Probably....debil's details

[jwasbury]

Originally Posted by fintstone

FL would be nice to winter in...especially if below the frost line so it is like summer in the winter.

fer sure...

its a ways off for me, but in retirement I could see having a condo in So. FL and wintering down there, while keeping a home in SE PA to spend the summers at.

[fintstone]

My wife is retired and I will be soon. A few weeks ago when it was super cold across the country, wife and I jumped in the car and drove south until we were not cold any more (comfortable in shorts). Drove down the east side and back up the west. We had thought we would like a retirement place to winter in FL that was farther north...but when we got there...it was still cold (50 -60F)..so we kept going. Had to get to Ft Lauderdale on the east and Naples on the west before we were warm. Ft Lauderdale/Miami had grown so much in the decades since we were there that the traffic seemed too much. Naples seemed just right in size and was equally warm (on the west side).

[UconnTim97]

I figured when I was taking home a few hundred dollars more a month in my paycheck that my tax return would be decreased by a few thousand dollars. I did my taxes already and the math checks out. I am disappointed in not getting as big a return as last year, but not surprised. That extra money in my paycheck had to be coming from somewhere.

I debated on increasing my deduction but that would be just giving the government interest free money for the year.

[widebody911]

We ended up owing almost $4k to the Feds, with no other changes.

[stomachmonkey]

Originally Posted by jwasbury

fint, you can't look solely at the rates, which were absolutely lower. The other piece of the equation is that deductions have been limited...particularly deductions for taxes paid (state income taxes and property taxes). So while the rates are lower, and your gross income can be same as previous years, your taxable income may be higher. those of us in the highest tax states like NY/NJ (where its "normal" to pay 20k in property taxes per year) are all going to pay more under the new law, even if our income is static.

Yup, I lost a huge chunk in property tax deduction.

Squirreled away a big pile of cash cause I'm expecting to get royally shafted this year.

[Jim Richards]

Originally Posted by fintstone

My wife is retired and I will be soon. A few weeks ago when it was super cold across the country, wife and I jumped in the car and drove south until we were not cold any more (comfortable in shorts). Drove down the east side and back up the west. We had thought we would like a retirement place to winter in FL that was farther north...but when we got there...it was still cold (50 -60F)..so we kept going. Had to get to Ft Lauderdale on the east and Naples on the west before we were warm. Ft Lauderdale/Miami had grown so much in the decades since we were there that the traffic seemed too much. Naples seemed just right in size and was equally warm (on the west side).

I think you'll like Naples a lot, Fint.

I'm working on my taxes right now (excluding the Pelican break!). Oh joy. Wish me luck!