With year-end fast approaching & tax reform being approved by House and Senate, there are a few things you SHOULD DO before the New Year in order to prepare for new tax laws going in to effect. If you have questions about what you can do before year-end to maximize your tax savings, or if you would like to learn more about how these and other tax law changes will affect you in 2018 and beyond, please contact your Saville professional.
Deferring income
It may be beneficial for certain taxpayers to defer items of income from 2017 to 2018 if subject to lower marginal tax rates in 2018
Moving expenses
Taxpayers involved in domestic or international moves for employment purposes should consider accelerating the commencement of the move into 2017 and incurring moving expenses before year-end, as both bills repeal the deduction and exclusion.
Charitable contributions
Taxpayers should consider making charitable donations before year-end, particularly if they will no longer be itemizing their deductions in 2018 because of the increased standard deduction.
Unreimbursed Business Expenses
The law removes all deductions currently deductible as a miscellaneous itemized deduction. These typically include:
- tax preparation fees
- financial planning fees
- investment fees
- job-related expenses not reimbursed by an employer
Taxpayers who typically utilize these deductions should consider paying these expenses by the end of the year. The benefit could be limited for taxpayers subject to alternative minimum tax in 2017.
State and local tax
The bill will limit the deduction for state and local real estate and income taxes to $10,000 in 2018.
Taxpayers should consider paying state, local, and foreign real estate and income taxes by year-end provided the liability for such taxes has accrued (and the local jurisdiction allows).
- Taxpayers should consider paying their state income tax liabilities by year-end, although the benefit of the deduction could be limited for taxpayers subject to alternative minimum tax in 2017.
- Deductible payment of 2018 income taxes in 2017 is specifically excluded.
- Taxpayers who generally deduct state sales taxes should consider accelerating purchases of high-priced items to maximize the state sales tax deduction.