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!
