On Friday, President Trump signed the new tax bill into law. Starting January 1, 2018, most of the new provisions take effect.
The basic advice to taxpayers is to load up as many of your itemized deductions into this final week of 2017 as your deductions are likely to be more valuable now than in the future. However, the biggest bang will likely come by paying your state and local taxes in the current year. Here are a couple of thoughts:
Real Estate Taxes – One of the most significant changes under the new law is its limitation of state and local tax deductions to $10,000 per year. For most home owners, it will be beneficial to prepay some or all of your 2018 property tax bill before January 1. There are no legal problems prepaying your property tax bill, however, many municipal tax offices do not accept advance payments beyond the assessed tax cycle. Consequently, some municipalities just might not accept your prepayment. Another catch here, if you owe Alternative Minimum Tax, then prepaying your property taxes probably won’t help your situation much, as your AMT tax calculation will not change.
State Income Taxes – Many taxpayers will also benefit by paying their 4th quarter state income tax estimate prior to January 1. Again for taxpayers in the AMT this will not provide much benefit, but for others it should be worthwhile.
If you have any questions regarding this article, please contact Jamie Downey at JMDowney@DowneyCoCPA.com or at 800-849-6022.
