Year-end Tax Planning 2017Submitted by Guidant Planning on December 20th, 2017
The GOP has high hopes of that the House and Senate tax plans will be reconciled and getting the reformed bill to President Trump’s desk before Christmas. Today, President Trump stated “We’re very, very, close on a tax deal.” However, even if legislation is not approved before the end of the year, it will almost certainly be retroactively dated to January 1, 2018, so that Americans will experience its full effect for the year.
As the negotiators are feverishly working to reconcile both the House and the Senate’s plans, it’s extremely difficult to know the final form of the tax plan. We can gain some assurances from the fact that in both the current versions there are proposals that are in common. For example, both the House and the Senate bill are proposing the elimination of deductions for both property taxes and state taxes.
So, if you are currently itemizing deductions (Schedule A) for property tax and state tax, you may lose these deductions going forward. Further, it appears there may be additional provision to lessen the ability to itemize, with mortgage interest in it’s sights. With that said, potentially more taxpayers will utilize the new standard deductions. Effectively, losing the other deductions in your Schedule A. With this in mind there a few ideas to consider:
1.Prepay your 2018 CA Taxes. Whether you make estimate payments (4th Qtr due 1/15/18) or have balance due at tax filing, if you pay in 2017 you will be able to deduct those payments. Depending on the size of your CA tax bill, this could save you thousands.
2.Prepay your 2018 Property Taxes. Many of us, just recently paid the first installment of property taxes on 12/10/2017. If you choose to pay your second installment (due 4/10/2018) you can take that deduction in the current year.
3.Review the rest of your deductible items; vehicle licensing fees, charity (if you make annual contributions, consider writing a check in December, etc.)
As always, should you have any questions please don’t hesitate to contact us.
All the best, Happy Holidays and a Happy, Healthy New Year!
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