OUR recommendations of tax moves before year-end is a little different because of President Trump’s major tax overhaul and the time – or lack of it – to implement tax savings ideas in just before 12/31/17.
Tax rates are going down, standard deductions are going up, and property taxes and state taxes are capped; therefore, consider pulling deductions into this year and pushing income into next year.
1. Prepay your January mortgage installment in December to deduct an extra month of mortgage interest that you might not be able to deduct on your 2018 return.
2. Prepay property taxes due next year to avoid maximum $10,000 cap in 2018. Property tax bills generally go out in the fall with half the taxes due by early December and the other half due by April. If your state and local taxes will be greater than $10,000, pay the April installment before the end of this year.
3. Pay your January state estimated taxes in December to deduct this year instead of next.
4. If you’ve been planning to buy a car, do it before the end of the year to avail of sales tax this year.
5. Take advantage of expiring deductions for home office, depreciation on a personal computer required for the job, dues to professional societies and subscriptions to journals and trade magazines, business entertainment expenses, such as sports tickets or green fees, and membership dues for clubs organized for business.
6. Make gifts to charities whose benefits will likely decrease on Jan 1.
7. Harvest your capital losses to offset capital gains.
8. Postpone and defer receipt of income until 2018 to take advantage of the lower tax rates. Individual marginal tax rates are shifting lower, so you’ll generally pay less taxes on the same amount of earnings in 2018 compared with 2017.
9. Consider holding off on sending invoices so the payments come in 2018 if you are self-employed.
10. Pass-through entities such as S corporations, LLCs and partnerships will get a new 20% deduction in 2018 so consider deferring income and accelerating deduction.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California.
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He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies. He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at [email protected].