Ways to Take Advantage of a Higher Standard Deduction in 2018
The final tax bill has passed and we know that there will be both lower tax rates and a substantially higher standard deduction. So whether you itemize this year but won’t in 2018 or you will continue to itemize but will being taking your deductions against a lower tax rate, you should consider ways to maximize your itemized deductions in 2017.
Review the steps we suggest you consider in case you want to implement any of them:
- You will be limited to a total deduction of $10,000 for your combined state income and real estate taxes. So be sure your real estate taxes have been paid, pay your fourth quarter state estimated tax payment this month, and if you think you may have a balance due on your state income taxes in April, consider having a projection done so you can pay that balance now. (If you are subject to the alternative minimum tax, these may not make a difference since taxes are not an AMT deduction).
- Pay off any outstanding charitable pledges.
- Make your 2018 charitable contributions before the end of 2017. You can notify the charity that this is your 2018 contribution – it may save them the cost of soliciting you next year.
- Make your January mortgage payment before year-end to get one extra month of interest (and mortgage insurance premium expense).
Miscellaneous itemized deductions will no longer be deductible, so if yours typically exceed 2% of your adjusted gross income, prepay whatever you can before year-end. These include things such as safe deposit box fees, investment expenses (publications, for example), professional dues, specialized work clothes or tools, unreimbursed employee business expenses, and tax preparation fees.
Please contact us if you have any questions.