Welcome to City-Data.com Forum!
U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > U.S. Forums > New Jersey
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 09-21-2010, 05:18 PM
 
312 posts, read 1,160,281 times
Reputation: 169

Advertisements

The AMT was basically meant to be a tax on the wealthy that would eliminate a lot of tax loopholes. If you make above 175K you are subject to a flat tax rate and this eliminates most itemized deductions. The problem with this tax especially in the Northeast where cost of living is high, is that a household income of 175K does not necessarily mean you are living comfortably. Especially when you have a mortgage and family to support. This is not a new tax but the bush tax cuts expire so if you are subject to the AMT you will be paying a higher tax rate. If you don't really claim a lot of deductions then this is not really an issue but if you do claim a lot of deductions then yes, you will be left with less disposable income.

The AMT is not a new problem, it has been a problem for a while. This tax was meant to go after wealthy taxpayers who manipulated their tax returns to pay very little taxes. As the tax stands now it really hits upper middle class families hard as these families who have kids and mortgages who would have been entitled to tax deductions now basically have those tax deductions eliminated. If you live in an area where cost of living is low, 175K goes a long way, but out here in a state like NJ 175k will go pretty fast after u figure in mortgage and property taxes.
This article highlights the problems upper middle class AMT tax payers face:
Are you a high earner but not rich yet? Higher taxes ahead - Oct. 26, 2008

It will be hard to fix this issue as those who are fabulously wealthy really don't care and that those who do not earn 175k in household income are not really going to have sympathy. Also the number of households who earn between 175k-500k is rather small.
Reply With Quote Quick reply to this message

 
Old 09-21-2010, 06:34 PM
pvs pvs started this thread
 
1,845 posts, read 3,355,244 times
Reputation: 1538
Quote:
Originally Posted by manderly6 View Post
I know there was talk of eliminating the mortgage interest deduction for everyone. I can't fathom enough politicians would have the b alls to do this.
Hope you're right on this. FWIW, elimination of the mortgage interest deductible would also hurt a lot of them, no?
Reply With Quote Quick reply to this message
 
Old 09-21-2010, 06:43 PM
pvs pvs started this thread
 
1,845 posts, read 3,355,244 times
Reputation: 1538
Quote:
Originally Posted by artDDS View Post
If you make above 175K you are subject to a flat tax rate and this eliminates most itemized deductions.
But the talk now is anyone earning more than $100K. This affects a lot more people.

Quote:
Originally Posted by artDDS View Post
The problem with this tax especially in the Northeast where cost of living is high, is that a household income of 175K does not necessarily mean you are living comfortably. Especially when you have a mortgage and family to support.
And it's also been affected by inflation, where peoples' salaries these days are higher than when the tax was implemented, but the planners (geniuses they were), never indexed it for inflation, so now it affects the middle class more than the very wealthy.

Quote:
Originally Posted by artDDS View Post
This is not a new tax but the bush tax cuts expire so if you are subject to the AMT you will be paying a higher tax rate. If you don't really claim a lot of deductions then this is not really an issue but if you do claim a lot of deductions then yes, you will be left with less disposable income.
Yep, and from what I have seen, it especially hurts those in NY, NJ and CA, whose Property and Income taxes are so high. From what I could discern (but I'm not good at interpreting this financial jargon), if your state and local taxes are very high, it can put you into the AMT Brackets.

Quote:
Originally Posted by artDDS View Post
This article highlights the problems upper middle class AMT tax payers face:
Are you a high earner but not rich yet? Higher taxes ahead - Oct. 26, 2008
Thanks for this ... will review it as soon as I finish this post!

Quote:
Originally Posted by artDDS View Post
It will be hard to fix this issue as those who are fabulously wealthy really don't care and that those who do not earn 175k in household income are not really going to have sympathy. Also the number of households who earn between 175k-500k is rather small.
But again, we're talking $100K-$500K now, not $175K. All the same, your point is noted ... the middle class is being shafted again, the rich don't notice, and those who earn less will have no sympathy.

[EDIT]Yikes, finishing up the article you posted ... this sounds almost like a caste system ... preventing the middle class from ever joining the ranks of the TRULY wealthy. And the TRULY wealthy are the ones who get bailed out. We, as a people, should be SO PI$$ED!![/EDIT]

Last edited by pvs; 09-21-2010 at 07:00 PM..
Reply With Quote Quick reply to this message
 
Old 09-22-2010, 11:17 AM
 
Location: West Orange, NJ
12,546 posts, read 21,326,972 times
Reputation: 3730
Quote:
Originally Posted by pvs View Post
Some of what I've posted here came from an email I received from an accountant. But I have also found and read this:
2010 Taxes

The one point that was in the email from the accountant, that I cannot seem to corroborate with online searches, is the elimination of Mortgage Interest as a deductible. OUCH! That would hurt a lot of people. Has anyone got any information about this actually being part of the plan?
this is being discussed a lot in the media, but it really is a longshot to ever happen. the theory behind eliminating it is nice. phasing it out after a certain amount is also being considered (theory - why should someone who buys a $1,000,000 home get the full writeoff? you're subsidizing and encouraging people to buy more expensive homes - unintended consequence of the original spirit of the write-off which was to promote homeownership).

the debate on whether the gov't should promote homeownership through tax deductions can go on FOREVER.

the fact is, right now they do, and what will it take to get them to stop? It would be political suicide for a politician to do it. that's why 2010/11 it's heating up, because it will be a lame duck period where political suicide is more likely to be avoided.

My thoughts - not a chance it's going to happen. will cause way too large of an outcry as many people enjoy this deduction. right or wrong is a different conversation.

AMT - they band-aid it every time it comes up. never fix it permanently. i'd expect the band-aid fix again.

bottom line - when considering to buy, don't buy more than you can afford. interest rates likely won't ever be lower in your lifetime. and home prices are at or near as low as they'll go. if you're buying and can stay long term (at least 5 years, i'd say 7) - now seems as good a time as any, irregardless of the tax incentives.
Reply With Quote Quick reply to this message
 
Old 09-22-2010, 11:21 AM
 
Location: West Orange, NJ
12,546 posts, read 21,326,972 times
Reputation: 3730
Quote:
Originally Posted by artDDS View Post
The AMT was basically meant to be a tax on the wealthy that would eliminate a lot of tax loopholes. If you make above 175K you are subject to a flat tax rate and this eliminates most itemized deductions. The problem with this tax especially in the Northeast where cost of living is high, is that a household income of 175K does not necessarily mean you are living comfortably. Especially when you have a mortgage and family to support. This is not a new tax but the bush tax cuts expire so if you are subject to the AMT you will be paying a higher tax rate. If you don't really claim a lot of deductions then this is not really an issue but if you do claim a lot of deductions then yes, you will be left with less disposable income.

The AMT is not a new problem, it has been a problem for a while. This tax was meant to go after wealthy taxpayers who manipulated their tax returns to pay very little taxes. As the tax stands now it really hits upper middle class families hard as these families who have kids and mortgages who would have been entitled to tax deductions now basically have those tax deductions eliminated. If you live in an area where cost of living is low, 175K goes a long way, but out here in a state like NJ 175k will go pretty fast after u figure in mortgage and property taxes.
This article highlights the problems upper middle class AMT tax payers face:
Are you a high earner but not rich yet? Higher taxes ahead - Oct. 26, 2008

It will be hard to fix this issue as those who are fabulously wealthy really don't care and that those who do not earn 175k in household income are not really going to have sympathy. Also the number of households who earn between 175k-500k is rather small.
very well said! i think you hit the nail on the head.
Reply With Quote Quick reply to this message
 
Old 09-22-2010, 11:45 AM
 
14,780 posts, read 43,465,675 times
Reputation: 14621
A lot of this is coming up because of the expiration of the Bush tax cuts that temporarily "fixed" the AMT and changed the tax rates across the board. They were always set to expire as of 2011 tax year, so this is nothing new. What is up for debate is how it will be handled. The issue right now is that there are 3 seperate main plans being considered and multiple others out there. Nothing is set in concrete yet, but I wouldn't be worried. I don't think we will see a quantum shift as the three main plans (Democrat, Repulblican and Obama Budget) all make allowances for the continuance of a lot of the tax breaks. Of course it is easier for the media to report that they will expire and we are all going to pay more, but the truth is that they most likely will be retained for the vast majority.

I wouldn't let the decisions regarding federal taxes sway me on a decision to buy a house. If you are ready to buy because buying is the right move for you and your family, then you should buy.
Reply With Quote Quick reply to this message
 
Old 09-22-2010, 12:57 PM
pvs pvs started this thread
 
1,845 posts, read 3,355,244 times
Reputation: 1538
Quote:
Originally Posted by bradykp View Post
bottom line - when considering to buy, don't buy more than you can afford. interest rates likely won't ever be lower in your lifetime. and home prices are at or near as low as they'll go. if you're buying and can stay long term (at least 5 years, i'd say 7) - now seems as good a time as any, irregardless of the tax incentives.
Quote:
Originally Posted by NJGOAT View Post
I wouldn't let the decisions regarding federal taxes sway me on a decision to buy a house. If you are ready to buy because buying is the right move for you and your family, then you should buy.
@ bradykp & NJGOAT, Thank you so much for this advice. What you both are saying here makes a lot of sense. I think the email from the accountant (that started my own research into this) was being a bit alarming, especially after some of the other bits I've read since yesterday, e.g.: How Income Taxes Will Change in 2011 - Real Time Economics - WSJ and http://www.taxpolicycenter.org/taxto...igh-income.cfm

Thanks again, folks!
Reply With Quote Quick reply to this message
 
Old 09-22-2010, 01:28 PM
 
Location: West Orange, NJ
12,546 posts, read 21,326,972 times
Reputation: 3730
Quote:
Originally Posted by pvs View Post
@ bradykp & NJGOAT, Thank you so much for this advice. What you both are saying here makes a lot of sense. I think the email from the accountant (that started my own research into this) was being a bit alarming, especially after some of the other bits I've read since yesterday, e.g.: How Income Taxes Will Change in 2011 - Real Time Economics - WSJ and TPC Tax Topics | 2010 Budget -* Tax Increases on High-Income Taxpayers

Thanks again, folks!
yeah. i would hope your accountant is more responsible, but their job is to let you know of the possible risks with future tax issues.

the media - ignore them! block them out! they get ratings based on doom and gloom. avoid all the opinion pieces and just find the real news (tough to do these days). bottom line is, it will be a huge event if politicians come together and eliminate mortgage interest tax deduction.

a great podcast for understanding a lot of the media spin related to money issues is Planet Money by npr. in fact, just reading their website is great, but the podcasts offer a lot of insight to these things. NPR has a few good podcasts for sifting through all the spin. "It's All Politics" is another good one, where they really seem to stay neutral and keep opinions out.
Reply With Quote Quick reply to this message
 
Old 09-22-2010, 03:03 PM
 
1,319 posts, read 4,234,177 times
Reputation: 822
Bottom-line is all these tweaking and patching of taxes isn't going to solve the issues we have.

They need to overhaul the whole system but congress nor the President have the will or political force to get this done...

Anyhoo that's my two cents. As for whole might not be good time to be homeowner...fear of loosing job and not being able to find a new one before you get crushed from mortgage plays much bigger part than alternative tax.
Reply With Quote Quick reply to this message
 
Old 09-22-2010, 03:25 PM
pvs pvs started this thread
 
1,845 posts, read 3,355,244 times
Reputation: 1538
Quote:
Originally Posted by bradykp View Post
yeah. i would hope your accountant is more responsible, but their job is to let you know of the possible risks with future tax issues.

the media - ignore them! block them out! they get ratings based on doom and gloom. avoid all the opinion pieces and just find the real news (tough to do these days). bottom line is, it will be a huge event if politicians come together and eliminate mortgage interest tax deduction.

a great podcast for understanding a lot of the media spin related to money issues is Planet Money by npr. in fact, just reading their website is great, but the podcasts offer a lot of insight to these things. NPR has a few good podcasts for sifting through all the spin. "It's All Politics" is another good one, where they really seem to stay neutral and keep opinions out.
Thanks again bradykp. I'll check out the NPR podcasts. I currently receive their Science Friday episodes, but never looked at their other offerings. This sounds good ... and more reasons to start bringing the BT Headset with me on the trainride. They are GREAT for the Non-Quiet-Commute cars ;-)
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:




Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > U.S. Forums > New Jersey

All times are GMT -6.

© 2005-2024, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top