A few changes in the 2018 tax bill might encourage some action now.
There are a number of changes in the 2018 tax bill that just passed. We will be sending out more information as we get all of the details over the next few days, weeks and months. However a few of the changes might impact what you do this year.
1.Tools Deduction: If you have traditionally received a write off for tools, or other un-reimbursed expenses, those will no longer be deductible in 2018. That doesn’t necessarily mean you will pay more tax, but it may make sense to make some purchases now that you would have put off until the new year. Un-reimbursed business expenses in 2017 are still deductible.
2. Contributions: Although contributions will still be deductible under the new tax law, because of the much higher standard deduction, many tax payers wont receive any direct savings from their contributions. Consider making some of your 2018 contributions in 2017 to take advantage of those tax breaks.(note: if you are making large contributions that you would normally make in 2018, it might be a good idea to let the non-profit know your intentions- especially small non-profits).
3. Kiddie Tax: The Kiddie tax is set for a big increase in the new tax law. If you can move taxable assets in your kids names into 529’s or other tax sheltered vehicles, it might make sense to do so sometime soon. Less important to do this before year end, just do it before they report large earnings in 2018.
4. Prepay State Taxes??: We had initially been encouraging clients to prepay some of their 2018 tax with their 2017 estimates, with the intention of applying those over payments to 2018. This was due to the cap on state and local tax payments as an itemized deduction in 2018. However from what we are reading Congress intends to close that loophole. We are not sure how, but that is what has been put on the table. If you have already prepaid some tax, no harm/no foul.
There are many more changes to the tax law, and we will be getting that info out to you as quickly as possible. We will also be preparing an estimate on how the new tax law will change your 2018 tax return, while we are preparing your 2017 taxes this year. We will discuss that with you when you pick up your tax return this year. Please feel free to ask us any questions regarding the tax changes and how it might impact your return, or your planning.
We look forward to seeing you this coming tax season. Please feel free to contact us if you have any questions.