Thursday, December 21, 2017

TAX REFORM 2018 – WHAT SHOULD YOU DO BEFORE DECEMBER 31, 2017.

Congress is fond of passing tax bills in the last week of the year, and this year was no exception!



The standard deduction is changing to $24,000 for married taxpayers, $18,000 for heads of household and $12,000 for individuals. As a result, if your total itemized deductions are below the new standard deduction number, you will no longer be itemizing.

Your itemized deductions include state and local taxes, property taxes, charitable deductions, mortgage interest, etc.

Starting in 2018, total state taxes – your state income taxes plus your property taxes – will be limited to a $10,000 deduction.

Mortgage interest will be limited to $750,000 of mortgage interest and home-equity line of credit interest will no longer be deductible.

Unreimbursed employee expenses and other 2% Miscellaneous deduction (safe deposit box, tax return preparation, investment fees) will no longer be deductible.

What can you do before year-end? 

  • Prepay your State taxes for 2017 – don’t wait until 2018 to pay. You cannot prepay next year’s taxes and take a deduction, but you can make sure to pay 2017’s tax prior to year end and take the deduction on 2017’s tax return.

  • Prepay your real-estate taxes prior to year-end, if possible. For example, if you recently received a property tax bill in the mail with the option to pay “1st half” and “2nd half” – you can pay both now. This can be tricky if you escrow your tax payments with your mortgage payment.

  • Make your 2018 charitable contributions before 12/31/17. This includes that trip to Goodwill you’ve been putting off!