As you have probably heard, adoption of a final federal tax bill is expected very soon. The final bill is long and complex, and it is still being analyzed. It will affect every taxpayer in a variety of ways. With less than two weeks left in 2017, there is little time to act this year in response to the bill. However, we have three recommendations that will benefit many taxpayers if the new bill is adopted:
- Prepay the second installment of your 2017 real property tax.
- Prepay any state income tax for 2017 expected to be owed.
- Make charitable contibutions in 2017 if your charitable deductions will be limited in 2018 because of the increased standard deduction.
Under the final bill, next year each taxpayer will be limited to $10,000 of deductions for state income tax, property tax and sales tax. So if you normally have more than $10,000 of combined property tax and state income tax per year, you should strongly consider a prepayment.
You should consider each of these recommendations in light of your own tax situation, and check with your tax return preparer before taking any action. For example, acting on these recommendations may not reduce your 2017 taxes if you will be subject to the Alternative Minimum Tax on your 2017 income.
Proposed changes in the basis rules for stock are not included in the final bill, so no special action is needed in response to those proposed changes.
We plan to provide additional guidance on the final bill in the coming weeks.