Wednesday, January 17, 2018

The New Reformed Tax Code, What's In It For Me?

I see here that the final version of the recent tax reform bill kept the $250 tax deduction for teachers:
The final bill also maintains the current $250 deduction teachers and principals can take for spending their own money on buying supplies for their classrooms. (See page 106 of the explanatory statement.) The legislation previously passed by the House would have eliminated the deduction entirely, while the Senate bill would have doubled it to $500.

The $250 deduction doesn't necessarily have a huge impact on educators' federal tax burden. But they see it as at least a symbolic recognition from Washington that, unlike many employees, they have to spend their own money to support their work. More on the teacher tax deduction is here. And more broadly, a joint congressional report on the bill also details the impact of new income tax brackets
I'll be spending even more of my own money next school year, as my principal said he will no longer by ink for printers in each classroom (btw, I brought a printer from home for that task!).  He wants to put 1 laser printer in each building and have the teachers in each building (up to 8 classrooms per building) use that "building" printer.  Sometimes I need to make a quick copy (my printer does that) or print something out, it's very convenient to have a printer at my desk rather than to walk to a different room to the "building" printer.  Since the $250 is a tax deduction and not a tax credit, though, given my tax bracket, one ink cartridge will more than consume the money the tax deduction saves me.  *sigh*

Of even more interest to me, however, is whether or not the new tax code increased the standard deduction.  I don't itemize, so an increase in the standard deduction would truly be a tax cut for me.  According to this CBS report, I'm in good shape: 
What's happening to the standard deduction?

That's roughly doubling -- from $6,350 to $12,000 for individuals, and from $12,700 to $24,000 for married couples filing jointly.


Now that I have a master's degree, my pay has gone up--yay me!  The increase in the standard deduction will help offset my pay raise, and lower tax rates will do more so.  However, I understand that the personal exemption has been eliminated.  Oops!  Also, I'm concerned because the 2017 tax year (after you-know-who had left office) was when the cost of employer-provided health insurance was to be added as income to be taxed (thank you, Obamacare).  Is that still the case?  If so, I'm hosed.

I have one guarantee that will add some money to my pocket, no matter what happens to tax rates and deductions and the like.  I'm not paying almost $4400/year out of pocket for my master's program anymore, so I'll get to keep all of that (minus, of course, what I saved by deducting education expenses).

It'll be interesting to see how my taxes pan out, both this April and next.

1 comment:

Mike Thiac said...

An initial look at the new plan may make one major positive change. I may no longer need to itemize.

Like you, I have a lot of business expenses, but with the higher standard deductable plus the fact my yearly interest on my mortgage is much lower now than it was 15 years ago (when I was also driving 1000 a month for the USAR, tax deductable), this may save me a ton of documentation.

We'll see how it works out.