2018 standard deduction; Roth IRA
Hello Terry. Actually, I have 2 questions. Question #1: I don't think I've heard anything about the standard deduction of $24,000 married filing jointly and home interest rates. For example, a couple could buy a house and have $1,200 interest per month = $14,400 interest deduction per year. If they don't have too many other deductions, then why even itemize when the standard deduction is $24,000 dollars ? (Plus personal exemption is gone, and if the couple has 2 kids, child tax credit will be increased (yes, I know it's a credit) by only $2,000). My point is that one reason for first time home buyers is the interest deduction! Now in many cases, that will be gone. No ?? I understand there are other reasons to buy, yet this seems to take away one very important (psychological) and financial factor for buying a house. question #2: though this is not really a question as much as it is an inquiry. Have you ever heard any talk about changing Roth contributions once a person turns 70 1/2 ? Specifically, what irks me (and I understand the government wants us to spend down), is that a person cannot take the amount out of a 401K RMD, pay the taxes on that amount, and then transfer some portion of it to an ongoing Roth IRA! A person just paid the necessary taxes, why can't they do what they want with the left over amount. Hope to hear back from you,
Terry Says
Well, as to the first question -- you're right on track. Home ownership has been made less attractive -- especially in states with high property taxes and state income taxes. You might not be able to deduct all your tax payments -- nothing above $10,000. AND, it will now be far more attractive to take the standard deduction than to itemize your taxes -- if you're under or even slightly over the $12,000/$24,000 standard deduction. Think of the tax prep fees you'll save! As for contributing to a Roth IRA, you can do it at any age -- IF you meet the income requirements. BUT the contribution MUST be from EARNED INCOME -- not dividends, or retirement pan withdrawals!
