Just prior to Christmas, Congress has given the green light to a sweeping change in tax law. It kicks in on January 1. This leaves little precious time to do much tax planning and it must be done over the holidays.
Here are 4 Fast Tax Moves to consider by New Year’s Eve under the Tax Cuts and Jobs Act (TCJA):
1)Pay 2017 State and Local Taxes
There is a $10,000 cap on all state and local taxes under TCJA. This includes sales, income and property tax. Pay what you can before January 1. This includes….
Paying the fourth quarter 2017 estimated STATE income tax payment.
Pay sales tax on “big ticket items” (furniture, automobiles, etc.) bought in 2017.
Do not think about pre-paying property taxes. Congress specifically prohibits pre-paying 2018 property tax by December 31, 2017.
2)Make an Extra Mortgage Payment
The standard deduction will nearly double for most taxpayers. That means far fewer people will itemize starting in 2018.
As such, taxpayer itemizing in 2017 could consider making their January mortgage before the end of the year. You would be able to deduct that extra interest in 2017 while you may not in 2018.
3)Give More To Charity
For 2018, the standard deduction amounts will increase from $6,500 for individuals, $9,550 for heads of households (HOH), and $13,000 for married couples filing jointly, to $12,000 for individuals, $18,000 for HOH, and $24,000 for married couples filing jointly.
That means most taxpayers will not claim the standard deduction and will no longer be able to deduct what is given to charities. 2017 might be the year to clean out your house and donate clothes and goods or write an extra check to church or favorite causes.
4)Grab Disappearing Deductions
Under TCJA, a long list of miscellaneous deductions disappear. Under current law, you get a tax deduction if the total of these expenses exceed 2 percent of adjusted gross income.
This includes expenses that you incur in your job that are not reimbursed; tools, supplies, dues and subscriptions, unreimbursed travel and mileage, and the home office deduction (as well as a computer or smart phone used for that office).
You want to pay for as many of these expenses as possible before December 31.
By: John J Kasperek. Enrolled Agent, who wants to provide people a ‘first look’ at the new tax law so as to make some swift decisions before the year 2017 ends.