Hey everybody, merry Christmas Eve! For those that don’t celebrate Christmas, happy holidays or just – hey, it’s the weekend!
I wanted to give a little update on what’s been going on with my crazy schedule lately and what to expect coming up.
First off, I want to apologize for having an inconsistent posting schedule lately. Life has caught up with me. Between moving apartments, an unexpected uptick in work activity (who increases the meeting schedule the week before Christmas???), and the normal December festivities, I haven’t had much time to work on the blog lately. Hopefully everything smooths out soon so I can get back to a normal schedule.
I won’t have a post out tomorrow because, well, it’s Christmas. I will have a new post out on Wednesday, and this is one I’ve been working on for months. It’s going to reveal a not-so-secret surprise about me. Then on Friday, I should have a new post out – but I can’t guarantee it because I’ll be travelling. After that, I should be back to my regular schedule in the new year.
Probably.
But for today, I wanted to focus on the biggest change to all of our personal finance futures…assuming all of my readers are US citizens, of course. And that, my friends, would be the tax reform legislation. I haven’t had nearly enough time to dig into it the way I wanted to. Luckily, other people have had that opportunity. So here are a couple different takes on the changes.
Individual Tax Planning Under The Tax Cuts And Jobs Act Of 2017
Kitces – December 18, 2017
This post was published a few days before the bill was actually turned into a law, but it is by far the most thorough review I’ve seen. In fact, it’s so thorough that I haven’t had a chance to fully digest it. But what I have paid attention to, and what I think most of you will care about, is:
- Capital Gains and Qualified Dividends under the new plan
- the adjustments to personal exemptions and standard deductions and how that affects you, as well as rules on itemizing
- Child Tax Credits
- miscellaneous itemized deductions (this isn’t getting a lot of attention from what I can tell, but could affect a lot of people)
- 529 plans
- Alternative Minimum Tax (I know a few dual-mil officer couples who have had to pay the AMT)
- Passthrough rules – very important for anybody with a small business, including side hustles!
- Roth Recharacterizations (important for the FIRE crowd)
I’ve already had a few friends reach out to ask questions about how the new tax structure will affect them, to which I will use Michael Kitces’ line:
Ultimately, the new tax rules are actually complex enough that it will likely take months or even years for all of the new tax strategies to emerge, from when it will (or won’t) make sense to convert to a pass-through business, to navigating the new tax brackets, and the emergence of strategies like “charitable lumping” to navigate a higher standard deduction.”
That is to say….too soon to tell. I’m trying to figure out my 2018 tax strategy right now but I don’t know if I will have enough time to write about it before the end of the year. If you are interested in these things, I will tell you that the three things I’m looking at right now are:
- whether to leave my TSP contributions as is, move them all to the Traditional TSP only, or move them all to Roth. This one is pretty complicated and I probably won’t make a final decision before the end of 2017.
- whether to prepay my property taxes on my rental home. I don’t know a) if this is allowed by the state or b) whether it would even help, but might be worth doing anyway as it could help me knock out some minimum spend on my credit card churning plan.
- whether I should restructure my business based on the new passthrough rules.
The New Tax Law and How It Impacts Your Early Retirement
Mad FIentist – December 22, 2017
For those of us in the FIRE crowd, Mad FIentist wrote a post specifically on how the tax plan will affect us.
Spoiler alert: not much changes.
Most of the strategies that people chasing early retirement use today will stay in place. The only part that changes is those Roth recharacterizations I mentioned earlier. This is a strategy that, as far as I’ve been able to determine, wouldn’t have been on my list anyway. No skin off my back. The two main strategies I’m considering are Roth Conversion Ladders and SEPPs, which both remain valid. If what I just said means nothing to you, definitely check out this link.
I haven’t found a good post yet on how the new tax plan will affect military families, but I’ll be sure to let you know when I do.
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