20 Dec 2017 Beacon Flash – Tax Strategies Prior to 12.31.2017
President Trump is expected to sign the new tax reform legislation into law later this week. With that in mind, here are a few important strategies that may be worth considering before the end of this year.
- Under the new tax bill there will be a $10,000 cap on the amount of state income and property taxes you can deduct in 2018. Therefore it may make sense to pay part or all your 2018 property taxes and any projected 2017 state income tax balance (i.e. your Q4 2017 estimated state taxes) prior to 12.31.2017. This could be the case even though, for some, the benefit of doing so could be limited due to the alternative minimum tax.
- In 2018 the standard deduction available to all taxpayers will nearly double to $12,000 for single filers and $24,000 for married couples filing joint returns. This means that if you have historically itemized your deductions there’s a greater chance that you’ll opt to take the standard deduction in 2018 (especially if you have a small or no mortgage.) If this is the case for you, it effectively means you may not realize a tax benefit for your charitable contributions next year. If you plan to itemize your deductions in 2017, you might consider doing some or all of your 2018 giving prior to 12.31.2017. That way you can realize the tax deduction for your 2018 giving in 2017 and utilize the expanded standard deduction in 2018.
Given the complexity of the new tax bill and taxes in general, please consult your CPA or tax preparer and work with them to decide if any of these strategies are appropriate for you. Know that we will continue to stay on top of the changes in tax law and keep you informed of any planning strategies that may arise.