2018 Tax Reform Recommendations

Post date: Dec 14, 2017 2:37:9 AM

December 13, 2017

Dear Clients,

We want to touch base with you regarding the pending tax reform. Nothing is set

in stone yet, and the House and Senate bills have some significant differences.

Therefore, it is difficult to make any definite recommendations before the final bill

is passed by both the House and Senate.

However, there are a few recommendations that we would like to make

considering the most likely changes to the tax code.

First, if you are going to make a 4 th quarter estimated state tax payment or pay in

some state tax with your extension, we would recommend making those payments

prior to the end of 2017 if you itemize your deductions on Schedule A. Both the

House and Senate appear to be fairly set on eliminating the deduction for state and

local taxes (SALT), so you likely will not be able to deduct that estimated state tax

payment if you make it after the end of this tax year (2017). Usually it’s fine to

wait until January 15 th to make that 4 th quarter payment, but you may lose the

deduction for it if you send it after December 31 st .

Another recommendation is if your itemized deductions’ total is not much higher

than the standard deduction, then you might want to pay all that you can in 2017 to

make sure that you get the maximum deduction (for example, real estate taxes,

charitable donations, medical bills, etc. that you could wait until 2018 to pay will

have more of a tax benefit if you pay them in 2017). The tax brackets will likely

change to reduce the overall tax rates somewhat, so your deductions will probably

have more effect on lowering your taxes this year. Also, both the House and Senate

are proposing to increase the standard deduction, so it might not be as beneficial to

itemize after 2017.

One final general recommendation is to make traditional IRA contributions (or

contribute more to your retirement plan through work) for 2017 as that will likely

provide more of a tax benefit than in 2018 when taxes will probably be lower.

If you have any questions, please let us know.