Now that both houses have approved the Tax Cuts and Jobs Act, it is certain 2018 will be the year of reform. Most of the details of the plan are set and we can now plan to do things before the end of 2017 that will create tax savings. There is no time to waste to prepare for change. Here are a few things you should consider before 2017 ends.
Prepay Property Taxes
State and local taxes will be limited to $10,000 in 2018. For homeowners who have more than $10,000 in property taxes and state income tax for 2018 it would be advisable to pay a portion of their 2018 property taxes in 2017.
Make all State Estimated Tax Payments in 2017
Typically your final state estimated tax payment is made in January, 2018. Under the reform bill that payment would not be deductible if your 2018 state and local tax payments exceed $10,000 so you would lose the deduction. However, if you make the payment prior to the end of the year you can take the deduction in 2017. The new law does not allow you to deduct in 2017 prepayments of you 2018 state income tax
Deferring Income or Prepaying expenses:
Deferring income is a standard tax saving strategy. However, this year it could pay off to pay a bit more attention to Income timing and recognition. Tax rates will be lower in 2018 so deferring income, when possible, could provide a tax savings.
Consider Delaying Gifts Subject to Gift Tax Until 2018.
Any wealth transfer that could result in a gift tax liability should be delayed until 2018. This would not include gifts where no liability is created by making the gift.
Need Help Preparing Your Taxes?
There is still time to consider if these tax strategies will work for you. If you would like to learn more contact us at 732-739-2632