Well, the president signed the tax bill so it is now law starting after December 31, 2017. We’ve gotten a lot of inquiries from clients about what this means so we’ll start unbundling the law as it applies to our client base over the next couple of weeks.
The first point that applies to all of our clients is that the new law doesn’t apply to the year that is about to end (Tax Year 2017). So, you’ll still be able to itemize just like always. That means:
- getting all those charitable contributions made before the 31st
In addition, since this is the last time that many will be able to itemize (or, frankly, need to do so), take a look at these options:
- Prepay property taxes due in 2018
- Re-register personal property like vehicles in advance if there is a tax involved
- Prepay items like alimony
- Pile on medical expenses especially if you’ve hit your deductible — probably too late for most of us since our providers are on holiday vacations!
- Prepay professional memberships like unions, chambers of commerce, the AICPA (in my case!), and the like
- Make purchases that qualify as unreimbursed employee expenses this year rather than waiting till 2018
- Pay your January mortgage payment in December (pay for two months in December)
What’s the common thread on all of these? They are items that you can deduct now but not next year and if you pay them in advance, you’ll be able to take the deduction on your tax return that you file before April 17, 2018. Scan your 2016 Schedule A for items you may be able to pay in advance since they won’t be deductible when you file your tax return in 2019 (for tax year 2018).
Note that in the fine print for this provision, the TCJA law’s implementation is going to require property owners to have a tax levy notice in hand in at the time of payment in order to take a deduction for prepayment of property taxes. Check with your county assessor or equivalent before attempting prepayment. Additional details are available at this IRS page but we read this stuff so you don’t have to.
If any of this is confusing, contact us for a one on one follow up.