by Paul K. Rudoy, CPA/PFS
We are in a period of uncertainty with two tax bills proposed and nothing finalized. However, there are two items that every taxpayer should look at before year-end: state & local tax and charity.
State and local tax deductions (SALT)
The State and Local tax deduction is very likely going away. Therefore, if you pay state and local estimated tax payments, you should consider paying your fourth quarter estimated tax payments in December as opposed to waiting until January 15. You might also want to consider paying the first quarter of 2018’s expected estimated tax payment in December to get a deduction that will not exist any longer.
Of course nothing in taxation applies to everyone. If you are an Alternative Minimum Tax (AMT) payer, paying your SALT payment earlier will not help you. Also, if you stretch to paying your April 2018 payment in December 2017, take a look and see if this will cause an over payment that could increase your taxable income for 2018.
Charitable contributions are likely surviving the new legislation. Standard deductions are greatly increasing, though, so you may not get any benefit of your charitable deductions. If you pull out your SALT deductions, medical and miscellaneous itemized deductions and the new total is under $24,000 ($12,000 for single filers) you may not get any tax benefits from making charitable contributions in the future. One small step is to pay your 2018 normal charity in 2017 and accelerate a tax deduction.
A bigger benefit would be to consider a Donor Advised Fund or a Charitable Trust. There are numerous ways to do this. The simple step though is to consider transferring an appreciated security (stock or mutual fund are the most common) to a Donor Advised Fund or Charitable Trust and you get a tax deduction for the value of the transfer. You eliminate any capital gains tax and get a charitable deduction in 2017. Just a transfer for a big tax deduction. You can give the money to charity whenever you want, by just opening the Donor Advised Fund in 2017 will get you the tax deduction. If you need help opening such an account or would like to discuss the many options you have, please let us know.
Every taxpayer is unique, so contact H2R CPA at 412-391-2920 or firstname.lastname@example.org to determine how to save the most in taxes for your personal situation.
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