State Tax cap, no property tax deductions - did anyone else fcked by this Trump tax double whammy?

Oct 15 56 Comments

just filed my 2018 tax returns and realized that my itemized deductible went down by a MASSIVE amount due to non deduction of property tax and $10K limit on state tax deduction.

i am not a tax optimizer and you could say i may have been sleeping under a rock but any legal ways to correct for this massive tax hit?

and why do people refer to trump taxes as a tax cut? i don't see a cut.

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TOP 56 Comments
  • Facebook gEKd541
    Not been in the US and could never understand it - why should you be able to deduct state tax from federal tax?

    All that this mean is that the low tax states subsidize the high tax state.

    If california and New York want to be progressive and help everyone - that's perfectly fine, go ahead. Why should people in Texas need to have a part in that? Wasnt that the whole point of having separate states that can determine their own way

    (I'm seriously asking here...)
    Oct 16 16
    • Intel adbC65
      Yes, I benefit the same from our military as every other citizen (corporations are just groups of citizens).

      Why does it matter if the double taxation is two separate transactions on a sequential basis or at the same time? It's the same money.

      Cities and states both tax lots of sales transactions at the same time - travel is the most obvious one on hotels and rental cars.

      Having lived in Sacramento and listening to people actually think it's logical to raise taxes because it's a discount from the federal government, I can tell you the incentive system was f'd up from whatever it was intended to be.

      Every tax change is intended to help the party in power. Same thing happened the last five administrations.
      Oct 16
    • Facebook gEKd541
      OpenTable - sorry, I didn't understand your examples...

      Why double taxed? Do you mean federal and state tax?

      If so (and I'm not a Republican or anything for that matter), I don't understand the issue.

      Federal taxes are, supposedly, agreed about by everyone in the country. They all get a vote (yeah, I know that doesnt work great), the criteria is the same regardless of which state you are in, the services you from it are the same and you are charged by the same criteria.

      Re churches - yeah, I would personally no include churches, but assume that's supposed to be some kind of shared value around what everyone in the country wants to promote and reduce taxes for. We can agree or disagree with a specific example, but the general rule of equal taxation remains (e.g. you can open up a church in any state and enjoy the exemption). Not a fan of exempting churches, BUT conceptually it is very different from state tax deductibles.

      State taxation level, however, is determined locally in the state to provide additional services that people in the state decided on with a collection structure determined locally (e.g. you can exempt or charge whoever in the state). Other states dont have a voice (good) unless in cases of conflict with federal law.

      Cost of living is a very tricky system. Much of it is locally determined by local decisions (e.g. cost of living is high in sf because the people living there dont want tall buildings to ruin their view and have strict zoning rules). Reducing cost of living, again, is at the hands of the state. Another couple of issues are that 1. it is hard to measure objectively 2. High cost of living usually correlates with (and is partially the result of) an area being rich.

      Lastly, some states getting more than others is something I commented about before. It is quite obvious that something like that would happen and I dont see anything wrong with it. The tax and services in this context are on the individual level, not the state. A poor person in California should get the same as a poor person in Alabama from the federal government. Same obligations same rights. As a result - yes - a state that has more poor people might have more money coming in. So what?
      As I understand it, the federal services are considered the most basic that's granted to every us citizen (vs. The luxury of the state services afforded to some, the people in the state).

      What am I missing?
      Oct 16
    • Intel adbC65
      You nailed it.

      Ultimately, we would be better off given our polarized philosophies to just have common defense, monetary union, and Bill of Rights. We would all like each other a lot more.
      Oct 16
    • Palo Alto Networks 123cats
      Super simple explanation of double taxation...

      Old way: Let's say you earn $100k/yr and your income is taxed at state level at 30%. That means your net income is $70k. The federal government assesses tax on $70k (after you deduct the $30k you already paid), since that's your actual income.

      New way: Federal government taxes you on the full $100k, even though you only kept $70k after paying state taxes. That means you paid $30k to your state government, and then have to pay tax on that $30k-shaped void in your bank account.

      Obviously this is super simplified because it doesn't take into account the marginal tax rates, the deductibility of up to $12k, etc. But it's the general idea.

      I can see the arguments both ways. But since blue states are at the end of the day still net givers and super conservative states tend to be net takers... I wonder why we don't then adjust the amounts states send to the feds to equalize that. Let us keep the money we don't use, so we can use it to lower state taxes or fees or something that benefits residents.
      Oct 16
    • Facebook gEKd541
      Palo alto - that part is clear, but these are different entities taking the money for different purposes...

      I'd be happy if you read my last long comment and explain where I'm wrong there. Other than the fact that the whole tax code is a patchwork of balancing political whims and it sucks to pay more, I still havent heard a compelling explanation for why removing the deductibles is the more logical and fair thing.

      And I really dont understand the net givers /takers point. Federal tax is meant to be a tax placed on individuals to guarantee a minimal bar for individuals. Why do the states play a part here? Why should a poor person in Alabama need to pay more (or get less) because they live in a state with less rich people. At the federal level there should be no difference - it is the minimal bar. The differences are then caused by the differences in state taxes and services
      Oct 16
  • Roku cruella
    Well.
    Ask the trumpeters. They will figure out a way to circle the square.

    Edit: There you have it OP! They have found a way to square the circle.
    Oct 15 4
    • Facebook badrobot1
      🤣🤣🤣
      Oct 15
    • Intel adbC65
      If you paid AMT before (most techies did), you got $0 deduction for sales or property tax. Now you get $10K. It’s a net tax cut.
      Oct 15
    • Verizon Media Atinlay7
      And you’re taking home more on your paycheck
      Oct 15
    • eBay weaTgqXz
      How many accounts you create man 🤦🏻‍♂️
      Oct 15
  • Tax cut is only for trumps rich friends. You’re not rich enough sorry
    Oct 15 1
  • Uber dreamyI
    Blame your state for state taxes, we don’t pay it in Washington and our taxes went down.
    Oct 16 1
    • Microsoft
      Tier 1

      Microsoft

      BIO
      #1 in Prestige
      Tier 1more
      This.

      The fact that State taxes were paid out before Federal taxes was effectively a federal subsidy on States that taxed income.

      The bug has been fixed.
      Oct 16
  • Verizon Media Atinlay7
    Why are you just now filing for 2018? That’s the question. This has nothing to do with Trump, it’s becuase you live in a high tax blue state and can’t deduct it anymore
    Oct 15 16
    • OpenTable Meliodas
      Big government Republicans want the fed to tax you more and the state taxing you less.
      Oct 16
    • Lockheed Martin / R&D Schz3
      Trump was a rubber stamp on a congressional tax bill. Trump provided zero leadership regarding bill content or getting it passed. It was literally the only accomplishment for the Republican Party in 2017. His job approval was tanking until they finally managed to pull something off. It’s been the lowest point of his term so far
      Oct 16
    • Verizon Media Atinlay7
      What is that? ^
      Oct 16
    • Lockheed Martin / R&D Schz3
      His approval rating was at it’s nadir almost to the day when the bill finally came together after the house and senate came to an agreement. Five days later the conference bill passed both houses and POTUS signed it two days after that. It is a bill that happened to pass while he was in office rather than his bill .

      Prior to that were spectacular congressional failures on immigration reform and repealing Obamacare the former of which failed in large part because whenever congress was approaching a bipartisan deal, Trump torpedoed it by saying he would not sign.

      So then the GOP controlled congress pivoted to tax cuts to pass some low hanging fruit and not become totally hated.
      Oct 16
    • Verizon Media Atinlay7
      I give up
      Oct 16
  • Apple / Eng MakingIt
    I just did my 2018 taxes. Family earned 2.6% less than 2017. fed taxes were 16% lower. We pay property taxes and pay interest (no rentals). No cap gains. Zero amt. standard deduction. Ca resident

    I thought tax cut was going to be neutral for me. As it turns out, lowered marginal tax rate also lowered my actual taxes
    Oct 15 2
    • Wayfair / Eng BScK77
      Similar story here. Net effect was saving about 5% on my effective tax rate.
      Oct 16
    • Intel adbC65
      Made 25% more and paid 24% more. But the true measurement is that $8K from what I would have paid pre-TCJA.
      Oct 16
  • Intel adbC65
    Did you pay AMT before like most techies? If so, your property tax and sales tax deduction was $0.
    Oct 15 4
    • OP
      Drop in AMT not as severe as drop in itemized deductions
      Oct 15
    • Intel adbC65
      Your itemized deductions under AMT pre-2017 were zero.
      Oct 15
    • Uber zzzz5
      Most techies don't pay AMT
      Oct 16
    • Intel adbC65
      They used to. 40% of people earning $200K-$1M, particularly those in high tax blue states, paid AMT before TCJA.
      Oct 17
  • eBay weaTgqXz
    He sure grabbed us by - you know what.
    Oct 15 0
  • Facebook i9js5
    No
    Oct 15 2
    • OP
      No as in did not affect you or there is no way out?
      Oct 15
    • Facebook i9js5
      It affected me, but we’re basically screwed on taxes in California no matter what
      Oct 15
  • Facebook public2
    Businesses tax rate was cut in half...make the appropriate changes and profit. If you are itemizing as an individual you are going to pay more.
    Oct 15 0

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