Announcement

Collapse
No announcement yet.

Itemized deduction question

Collapse
X
Collapse
First Prev Next Last
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Itemized deduction question

    I am considering opening a DAF before the end of the year and donating about 24k in appreciate shares (cost basis ~12k). This is my first year as a homeowner and would be my first year itemizing rather than taking the standard deduction. My wife and I are W2 employees, and will file jointly. Would appreciate any help/confirmation before I pull the trigger on transferring the shares.

    We should meet the 10k limit on SALT deductions (5% state income tax on AGI ~450k, local property tax ~2k), 2.5k student loan interest, 4k mortgage interest for at least a total of 16k.

    16k from the above + 24k in charitable donations = 40k which would be greater than the 24k standard deduction. Am I missing anything? I filed our taxes with turbotax last year but our AGI has dramatically changed as this is my first full year in practice so I just want to be sure before going ahead with the DAF.

    Thanks in advance!

  • #2
    You won't get 2.5k student loan interest deduction. You make too much.

    Otherwise you're good.

    Comment


    • #3
      I laughed at student loan.
      But otherwise yup.

      Comment


      • #4
        Your tax benefit is really only the amount of the deduction which is in excess of a $24k gross deduction amount. So, of your $24k donation only about $14k provides you any tax benefit.

        think of the $24k standard deduction as a bucket that you have to fill, and only the spillover amount provides any tax benefit. It takes $10k of your donation just to fill the bucket.

        of course you’re wiping out $12k of unrealized taxable capital gains as well. But if you were going to donate more in the future, you might be better served to wait and lump sum donate in a later year

        Comment


        • #5
          The only thing you’re really missing is a CPA. Don’t diy with turbotax- you don’t know what you don’t know.
          Hal

          Comment


          • #6
            I disagree. Take the time to figure it out. Taxes are not that complicated.

            Comment


            • #7
              Originally posted by [email protected] View Post
              The only thing you’re really missing is a CPA. Don’t diy with turbotax- you don’t know what you don’t know.
              Really? For 2 W2 earners? How do you justify that?

              Comment


              • tctray@msn.com
                [email protected] commented
                Editing a comment
                Because I’ve been in your shoes and made errors based on insufficient knowledge of the tax code. I recommend you do your own taxes, then hand them off to an accountant for review. The peace of mind alone is worth the fee.

            • #8
              Originally posted by jacoavlu View Post
              Your tax benefit is really only the amount of the deduction which is in excess of a $24k gross deduction amount. So, of your $24k donation only about $14k provides you any tax benefit.

              think of the $24k standard deduction as a bucket that you have to fill, and only the spillover amount provides any tax benefit. It takes $10k of your donation just to fill the bucket.

              of course you’re wiping out $12k of unrealized taxable capital gains as well. But if you were going to donate more in the future, you might be better served to wait and lump sum donate in a later year
              Thanks, I do understand that it’s only the amount above 24k that would be a net benefit to me.

              I will have to think a bit about waiting a year, although the 24k total is already likely several years worth of donations as is. Next year, I would expect our mortgage interest to be about double this year (bought our house in July) and our marginal tax rate will likely be 37% instead of 35% so the same 24k donation should go a bit further. Thanks again.

              Comment


              • #9
                Originally posted by Peds View Post
                I laughed at student loan.
                But otherwise yup.
                Glad I could provide some lols. We could have used it for 2018 if we went itemized. Good thing I asked.

                Comment


                • #10
                  Am I missing something? I don't know who student loan interest changed with the trump tax cuts but my memory is that student loan interest wasn't on schedule A...it came before schedule A on the tax form so you didn't need to itemize in order to get the deduction here. Did that change with the trump tax cut?

                  Comment


                  • #11
                    There is an income phase out for the deduction. That existed before TCJA. I am I unsure if changed

                    Comment


                    • #12
                      Originally posted by Lordosis View Post
                      I disagree. Take the time to figure it out. Taxes are not that complicated.
                      Lordosis
                      •Let’s start with the tax code itself. I would suggest the actual law would be a reasonable start point. Just to make sure we are on the same page, how many pages do you have? Pretty simple check point.
                      •Now, how many pages represent the law as it is in effect today?
                      Seems simple as one plus one.

                      No analysis or interpretation needed, just the book. I would like to read it. Note, it doesn’t exist in anyone’s bookshelf. I guess no one can agree on the fonts! First let’s agree on how many pages it is before we even attempt continuing the complexity of the content.

                      My point is that a jigsaw puzzle is extremely difficult to solve without a picture. Many interlocking bits and pieces.

                      https://www.vox.com/policy-and-polit...orm-ways-means
                      https://www.investopedia.com/article...egulations.asp

                      Comment


                      • #13
                        Originally posted by Tim View Post
                        Lordosis
                        •Let’s start with the tax code itself. I would suggest the actual law would be a reasonable start point. Just to make sure we are on the same page, how many pages do you have? Pretty simple check point.
                        •Now, how many pages represent the law as it is in effect today?
                        Seems simple as one plus one.

                        No analysis or interpretation needed, just the book. I would like to read it. Note, it doesn’t exist in anyone’s bookshelf. I guess no one can agree on the fonts! First let’s agree on how many pages it is before we even attempt continuing the complexity of the content.

                        My point is that a jigsaw puzzle is extremely difficult to solve without a picture. Many interlocking bits and pieces.

                        https://www.vox.com/policy-and-polit...orm-ways-means
                        https://www.investopedia.com/article...egulations.asp
                        I don’t get the point you’re trying to make.

                        Of course the tax code is complicated.

                        That doesn’t mean that TurboTax is insufficient for many peoples needs.

                        Do you disagree?

                        Comment


                        • Tim
                          Tim commented
                          Editing a comment
                          “Taxes are not that complicated” was my point. Taxes are complicated. For the vast majority, the “productivity tools” like TT for free was a capitulation to the prep industry.
                          The IRS caved. One needs to read and understand the forms. That takes a lot more than answering the frontside survey questions.
                          Taxes are that complicated. Learn it but the learning curve can be steep.

                      • #14
                        Are any W2 employees itemizing without significant charitable donations? If so, care to provide a breakdown of your deductions? I just don't see how I would ever beat the standard deduction. Thanks.

                        Comment


                        • #15
                          Originally posted by rxor49 View Post
                          Are any W2 employees itemizing without significant charitable donations? If so, care to provide a breakdown of your deductions? I just don't see how I would ever beat the standard deduction. Thanks.
                          not much of a stretch with a big mortgage

                          Comment

                          Working...
                          X