Year-End Tax Planning Tips In Light of Recent Reform
Tax laws will be undergoing some significant changes with the recent tax legislation reform.
Here are five items to consider doing before end-of-year:
With individual marginal tax rates dropping at the beginning of the year, consider deferring end-of-year income into 2018.
PAY BUSINESS EXPENSES
Currently, employees are allowed to deduct unreimbursed business expenses if they exceed 2% of their gross income. These deductions are set to expire at the beginning of the year under the new tax reform law. Consider paying any remaining business expenses this year to take advantage of these deductions before they go away.
PAY STATE & LOCAL INCOME TAXES
State and local income and property taxes will be deductible up to a combined $10,000 cap. If you fully expect to hit this combined cap in 2018 and are not subject to AMT (Alternative Minimum Tax), consider paying any outstanding 2017 state tax liability by the end of the year. The same applies if your tax rate will be lower next year.
MAKE YOUR CHARITABLE CONTRIBUTIONS EARLY
With a new higher standard deduction around the corner, you might consider making your 2018 charitable contributions by year-end if you don't expect to itemize deductions that exceed the new standard deduction level.
PREPAY YOUR JANUARY MORTGAGE PAYMENT
The tax overhaul will nearly double the standard deductions for taxpayers who don't itemize. For this reason, consider making your January mortgage payment this year. This would allow you to deduct an extra month of mortgage interest you might not be able to deduct on your 2018 return because of the higher deduction levels.
Of course, everyone's needs are unique and the above are just a few items you may want to discuss with your tax preparer or adviser before the end of the year.