It is likely that a significant tax overhaul will soon be passed into law. The Tax Cuts and Jobs Act of 2017 changes marginal tax brackets, the treatment of many itemized deductions, Alternative Minimum Tax (AMT) and estate tax to name just a few. Opportunities for tax planning remain despite limited time left in 2017 to take action. The following potential tax-saving actions depend on your individual circumstances and are based on the proposed legislation’s final version, released on December 15th.

As each individual’s situation is unique, B|O|S recommends that you consult with your tax professional before taking any of the following actions. Until the legislation is signed into law, circumstances may change quickly and impact the benefit of these actions.

  • Prepayment of State and Local Government Tax – For those individuals who have a 4th Quarter 2017 estimated state tax payment, it may be beneficial to make this payment in 2017 since the ability to itemize the deduction for state and local taxes may be scaled back. The proposed final legislation caps the deduction for any combination of state and local property, sales and income taxes at $10,000 starting in 2018. There are certain factors such as AMT which may limit or eliminate the benefit of prepayment.
  • Prepayment of Property Tax – For those with high property tax bills on your permanent residence, you may want to consider accelerating payment on a property tax installment to 2017. For those of you paying into an escrow account, please keep in mind that paying into escrow does not qualify as actually paying your property tax bill. The tax payment is only considered paid, and thus a deduction allowed, when the funds are disbursed to the taxing authority. Again, there are certain factors such as AMT which may limit or eliminate the benefit of prepayment.
  • Increase Itemized Deductions – Since the proposed doubling of the standard deduction may limit the number of taxpayers that benefit from itemizing, you may want to consider maximizing your 2017 itemized deductions where legally possible.

B|O|S will continue to monitor the situation and analyze the changed tax landscape and its impact in the New Year.

To reiterate, it is the responsibility of any person or persons in possession of this material to inform himself or herself of and to seek appropriate advice regarding any investment or financial planning decisions, legal requirements, and taxation regulations which might be relevant to the topic.

Opinions expressed in this article are current opinions, which are not reliable as fact, as of 12/19/17 and are subject to change.

Disclosures

Filed under: Tax Planning

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