As of today, we don’t have new tax legislation. The potential law is changing with every debate, and major tradeoffs are being made. By the time the law is enacted, it may be too late for you to take proactive actions, so here are a few ideas that might help – and certainly won’t hurt you.
- Tax rates are likely going down for most Americans. Deductions are worth more in 2017 than they will be in 2018, so consider prepaying charities, property taxes, January mortgage payment, etc.
- The standard deduction will double in 2018 from the allowed amounts in 2017. Many taxpayers will be taking the standard deduction (short form) in 2018, so consider paying your deductible expenses in 2017 when they still have value.
- One proposal disallows all medical expenses, so pay what you can in 2017 if your medical costs will exceed 10% of your income.
- You may have heard of SALT, which stands for State and Local Tax. Most likely this will be disallowed in 2018. So, if you are not already impacted by the Alternative Minimum Tax, prepay your early 2018 quarterly payments in 2017. If you are uncertain, do it anyway.
- If you are a business owner, accelerate/prepay expenses and defer income if possible.
Like most legislation, it’s not over “till the fat lady sings.” If you have questions, please give our office a call.
Ron Dickinson, CPA, CFP®, MPA-Tax