How might passage of the new tax bill change my tax plan for this year?
As the GOP tax bill continues to work its way towards finalization, people across the country are struggling to figure out what the new tax plan means for their finances and how they can prepare. The proposed tax bill aims to reduce the number of tax brackets from seven to four, while promising to lower taxes for middle income Americans. However, some of the provisions, including elimination of several popular deductions, could equate to more expenses for some. By starting your tax planning now, you may be able to reduce your taxes under the new bill if it becomes reality in 2018.
Take Advantage of the Current Deductions
With knowledge that changes are likely soon to come to the existing tax structure, you can alter your year-end tax filing and planning so as to benefit under the new plan. Depending on your unique financial situation, you may wish to consider delaying recognition of your income until next year or advance paying some expenses that currently qualify as an itemized deduction.
For example, homeowners should consider paying their January 2018 mortgage now, as it will include the interest due for December. You could also prepay your real estate taxes that will be due early next year. If the tax bill passes as currently written, your ability to deduct for your property taxes and mortgage-interest deductions will become limited.
Read through the current proposed tax bill and consider what other deductions that you use are set for elimination. Taxpayers that routinely donate to charity could benefit from making your 2018 deductions in 2017. If you are planning to sell your home or move in the near future, you could benefit by doing so now rather than waiting as several deductions associated with moving may soon disappear.
You can take advantage of the current deductions by speaking with your tax planning lawyer and altering your year-end payments now. Your attorney will help you to understand the coming changes so that you can plan for not just this year, but the next several years to come under the new tax bill.
Posted in: Tax Planning