Tax changes / proposals - discussion

[xerty]

Official IRS confirmation of 2023 inflation adjustments

IRS provides tax inflation adjustments for tax year 2023 | Internal Revenue...

[xerty]

Summary of changes looking ahead.

Berdon’s 2022-23 Tax Planning Guide

[jesselivermore]

@xerty

Work from home, the state tax wars. Aggressive states are claiming remote work for a company in another state is fully taxable in the company’s state, possibly in addition to the residents’ depending on credits / offsets between them. From the NJ vs NY round…

Remote Work and the State Tax War | City Journal

The proposed bill wages tax war on several other fronts. It offers Jersey residents tax credits if they challenge New York’s tax law in court and succeed. And the bill offers tax incentives for out-of-state firms employing New Jersey residents to open an office in-state, which could then become the home for telecommuting employees, exempting them from New York taxes.

What happens if I consult on occasion for one of these states? List somewhere? Doubt they’ll go after or it’s worth their time for small fees

glad to see AZ is heading in the opposite direction by lowering to a flat tax 2.5%. Our DOR is actually friendly, answer their phone and have taken care of issues w/o penalty. Wish they’d go TX property tax route…

[meed18]

@jesselivermore

What happens if I consult on occasion for one of these states?

If the company you are consulting for sends anything to the state income tax authority telling them how much they paid you…

@jesselivermore

Doubt they’ll go after or it’s worth their time for small fees

… they will.

[jesselivermore]

Taxation w/o representation! Most stuff I’ve done so far is de minimis but there is a big one that has offices in high tax states Boston | Chicago | Columbus | Dallas | Los Angeles |
Miami | New York |** **Phoenix ** San Francisco.

Hope they’re smart about it vs onus on employees like me

I bet more co.s incorp in TX etc to avoid this mess.

[xerty]

Estate planning

Planning With the Increased Exemption Amounts While They Last

[FatWaller]

I’m hoping a fellow FatWaller can clarify this situation. I purchased several 26-week T-bills not long ago. I’m trying to make last minute decisions in preparation to filling 2022 federal taxes, and would like to know if the interest is recognized in 2022 --when the T-bills were purchased-- or in 2023 --when I’ll get the principal back from TreasuryDirect.

Thanks a bunch for any info.

PS. If this isn’t the correct thread, please feel free to move my post somewhere else.

[onenote]

@FatWaller

if the interest is recognized in 2022 --when the T-bills were purchased-- or in 2023 --when I’ll get the principal back from TreasuryDirect.

The interest is recorded for the year in which the T-bill matures, 2023.

[FatWaller]

Thanks, Onenote!

[xerty]

how to lose by winning the lottery. tax fraud

Father and son are convicted in lottery scam where they collected $20M

[scripta]

@Daily Mail

Between 2011 and 2020, they cashed more than 14,000 lottery tickets and claimed more than $20 million in Massachusetts lottery winnings.

In 2019, Ali Jaafar was the top lottery ticket casher for Massachusetts. His son Mohamed Jaafar was the third highest ticket casher and his other son Yousef Jaafar was the fourth highest individual ticket casher.

Pigs get slaughtered, as the saying goes.

I wonder if there’s a market for cashing tickets in states that don’t collect state income tax on lottery winnings, like CA

[xerty]

The IRS is getting sued over their leaks to Propublica ahead of the last big Democratic tax hike push. Of course you can’t do anything when the IRS leaks your info or screws you over, but when you’ve got a few billion, you can have your lawyers give them a hard time.

https://www.wsj.com/articles/ken-griffin-sues-irs-over-tax-privacy-breach-that-also-affected-other-billionaires-11670942150

“IRS employees deliberately stole the confidential tax returns of several hundred successful American business leaders,” Mr. Griffin said in a statement. “It is unacceptable that government officials have failed to thoroughly investigate this unlawful theft of confidential and personal information.”

[xerty]

Vote with your well heeled feet

Super rich New Yorkers — including billionaire Carl Icahn — are fleeing the...

[scripta]

No doubt income tax is a huge factor, but there’s nothing new about it. NYC was in a bit of a healthcare mess when the pandemic started, so leaving was the smart thing to do for anyone with resources and ability to leave. Lots of people (or so I’ve heard) moved out of the city, but stayed in the state or in neighboring states. And sure, Florida was a big destination too for those whose politics weren’t aligned or just needed another excuse to leave. The fact that so many more people are working remotely and the “downtown” is not what they used to be is probably a huge factor for not moving back.

[onenote]

The porkulus 2.0 bill includes some big changes to retirement plans.

New retirement bill means big changes for retirement and 529 plans

• Automatic enrollment into new company retirement plans.
• Increasing catch-up contribution limits for people 60 to 63.
• Financial incentives for contributing to a plan.
• Expanded access to retirement plans for long-term, part-time workers.
• Expanded access to the Saver’s Credit (a tax credit for contributions) for lower- and middle-income employees.
• Easier access to retirement accounts for emergencies.
• The program considers student loan payments when determining the company’s 401(k) contribution.

[scripta]

All of those bullet points sound good to me. Are you complaining?

Lots of people don’t enroll into retirement plans because of “friction,” and auto-enrollment would take care of that.

[xerty]

Here’s a similar article discussing how there is middle class departures from high tax states as well.

Why the Middle Class Flees States That Tax the Rich

One recent study, for instance, found that income taxes take, on average, nearly 10 percent of family earnings from high earners in the Golden State, but just 1.2 percent from middle-income residents. Even high taxes elsewhere, such as on gasoline, don’t offset these advantages.

My first reaction to this cheery news about California was to wonder why, if it’s such a tax haven for the middle class (and even more so for low-income households), so many people are rushing to leave. California’s net domestic outmigration ranks highest among the states, which means that more residents are departing than arriving there—and they are exiting by the hundreds of thousands every year. You can’t have that kind of exodus just from upper-income earners—certainly not from the top 1 percent, the target of the highest tax rates. In fact, the biggest leavers by far are lower- and middle-income people. And middle-class losses have grown in the last five years to about 200,000 adult residents

[scripta]

You omitted the relevant quote:

@City Journal

Advocates of high taxes say that people don’t relocate because of taxes. It’s true that in surveys that ask people why they moved, migrants list plenty of reasons, including housing costs, economic opportunity, and pursuit of a better overall quality of life. Still, there’s a close correlation between lists of the highest-taxing states and rankings of states that people are leaving. The relationship is so glaring that several years ago Gallup remarked, “Even after controlling for various demographic characteristics including age, gender, race and ethnicity, and education, there is still a strong relationship between total state tax burden and desire to leave one’s current state of residence.”

But correlation is not causation. I bet the biggest reason, at least for CA, is housing costs. It’s really expensive to buy or rent in the major CA metros. BUT… is the grass greener on the other side? My thoughts:

Texas and Florida have no state income tax, but that makes little actual difference to the middle class because they don’t pay much tax in California. Texas property costs 50% less, but the property taxes are 2-4 times higher and aren’t protected from rising with prices (CA has Prop 13). Florida real estate may be a little cheaper and I believe property tax is similar to CA near 1%, but property insurance is 3-4 times higher in most areas. Arizona is the only place that makes financial sense, except their RE prices swing up and down like crazy too, and if you buy now you may end up under water for the next decade. And not everyone wants to live in the desert.

[Honkinggoose]

@xerty

which means that more residents are departing than arriving there

I believe your definition is flawed for Biden’s America.

I suspect “which means that more legal residents are departing than arriving there” would be a more accurate definition of net domestic outmigration.

[Honkinggoose]

@scripta

I bet the biggest reason, at least for CA, is housing costs. It’s really expensive to buy or rent in the major CA metros. BUT… is the grass greener on the other side? My thoughts:

So, I’m not sure of what point you’re making. You start by saying the biggest reason is housing costs, but then use 10x the space to explain why that’s not the case.