The short story is that the changing tax rates make a 2017 deduction worth more than it will be in 2018. And, although lots of deductions will be limited or go away altogether in 2018, you can get the tax savings you had hoped to take in 2018 on your 2017 return for some deductions.
Consider these options:
1. Pay your property taxes on or before December 31, 2017.
2. Give charitable gifts in 2017. With rates going up, a charitable deduction will save you more money in 2017 than it will next year. Additionally, you might end up not itemizing in 2018 since the standard deduction will nearly double. (Do remember, some deductions are going away altogether.)
3. Take business expenses now. If you pay union dues or a professional society membership fee or buy supplies for your job that you normally deduct on your taxes, you’ll want to buy everything you can by year-end. At the moment, employees can deduct a lot of their unreimbursed business expense on their taxes if the total is more than 2 percent of adjusted income. That deduction is going away entirely in 2018.
4. Max out the deductions you normally take. The general rule of thumb is: take the credit deduction in 2017. For example, teachers can take up to a $250.00 credit for buying supplies for their students. That’s not going away, but it’s still more valuable in 2017 than next year.
Another deduction going away in 2018 is for tax preparation services. Consider pre-paying your accountant now for the invoice they would normally give you in April after they file your tax return. If you can pay it now, you can still deduct it.
5. Delay income until 2018. Delay income until January when tax rates are lower, especially if you are a small-business owner. In addition to lower tax rates, many small business owners get a generous benefit starting next year of being able to deduct 20 percent of their business income tax-free.
Check with your tax professional of course. Taxes work differently for everyone, depending on income and circumstances, and these changes came through pretty close to the deadline. Run through this “to do” list now—pre-planning can help minimize next year’s tax bill.
That's it for now--I gotta pay pre-pay some deductions!
Rick
