Tax Changes on the Horizon – What to Consider Before Year End

By Cheryl A. Patterson

Our comments are general in scope and should not be relied upon as specific tax advice.  We strongly recommended that you discuss your specific situation with your CPA or tax preparer to determine what, if any, steps you should take prior to year-end.

A few highlights:

SALT (State and Local Tax)

Change –

  • Beginning in 2018 the total allowable deductible amount is capped at $10,000. This total includes real estate taxes and state income taxes.

What to consider doing before year-end:

  • Prepay any 2018 property taxes that have already been determined for your property.
  • If you pay state quarterly estimated taxes, prepay your 4th quarter tax before 12/31.
  • If you own property in other states, also prepay those real estate taxes.

 

Income Tax Rates

Change –

  • Individual tax rates will be lower in 2018 (many of the individual cuts are expected to expire in 2025, unlike corporate tax cuts which are permanent).

What to consider before year-end –

  • Defer income (i.e. bonuses) into 2018

 

Standard Deduction

Change –

  • The doubling of the Standard Deduction to $24,000 for married couples and $12,000 for individuals.

What to consider before year-end –

  • If the doubling of the Standard Deduction and the reduction in state and local income taxes means you will not be itemizing in 2018, consider making charitable contributions you had planned to make in 2018 before year-end instead.