If you’re looking ahead to the tax season in early 2018, it’s not too late to maximize your tax deductions. There are some excellent strategies that you can implement today that will pay dividends come tax return time. Plan ahead for these deadlines, and ensure that you get every deduction that you can.
Donate to Charity
This is a tried-and-true method of decreasing your yearly tax burden, and now is the time to do so. If you haven’t hit the threshold for charity donations yet, you should do so before the end of December. Monetary deductions made by cash, check, or credit card are tax-deductible, as are certain physical items such as clothing and household items. Make sure that you keep a written record of every charitable donation made. Supporting your favorite causes and reducing your tax burden? What could be better?
Accelerate Your State and Local Tax Deductions
If you live in a state with an individual income tax – think about paying property taxes and state tax payments before year end in order to be able to deduct these on your 2017 tax return. Keep in mind that if you are AMT, you won’t get a benefit for doing this. Also, with tax reform just ahead of us, we are uncertain if these deductions will be available to take in the future.
If you live in a state without an individual income tax – these states include Washington, Florida, and Texas – you can choose to claim sales and use taxes as itemized taxes instead of state income taxes. What this effectively means is that you have the opportunity to save money on your taxes. If a high-cost item that is subject to sales and use taxes is in your plan for the near future, you should strongly consider buying it before the year’s end. Pay your state and local taxes by the end of the year, and you could save even more.
Casualty Loss Deductions
This tax deduction, authorized by Congress in answer to the recent devastation of hurricanes Harvey, Irma, and Maria, provides victims of these natural disasters with an exemption from the 10% AGM threshold. Rather than itemizing specific deductions, people who are victims of these natural disasters can simply add this casualty loss to their standard deduction. Note that, as of present, people who are victims of the California wildfires are not included, but Congress may include them in this deduction before the year’s end. However, there are other tax relief opportunities for those affected by the fires on the state level, as well as an extension for federal taxes.
Stay on top of all relevant tax laws and changes with KROST. Contact us today for more information.
Author: Evelyn Fernandez, CPA, MBT