As you have probably read, the Senate passed its own version of the “Tax Cuts and Jobs Act” early Saturday morning. To work out the differences between the House and Senate versions, the two bills are currently in the reconciliation process.
While it’s too early to calculate specific impacts on each individual tax return and there are still many obstacles ahead, there are some tax planning strategies to consider before the end of 2017:
Generally, deductions should be accelerated and paid before December 31st. These include:
- Paying any 4th quarter state estimated taxes, ahead of the usual January 15th deadline.
- Prepay any upcoming real estate and property taxes due.
- Make your January mortgage payment.
- Consider making 2018 charitable gifting now, especially if related to purchasing season tickets at college sporting events.
- Prepay medical expenses.
Generally, income that can be deferred until after January 1st should be considered. This includes sending December invoices in January (if self-employed and can afford to wait an extra month for payment).
If you are subject to the Alternative Minimum Tax (AMT) for 2017, paying state or local taxes early will not provide any tax benefit.
Please note, the potential tax changes are still in flux and changing as lawmakers work to compromise and reconcile the bills. The advice above is also general in nature and may not be applicable to your individual tax situation. We will continue to monitor progress of the tax bills and will send out an update if a final version is passed.
As always, if there are any changes to your financial situation or if you have specific questions please reach out to us at your earliest convenience.