John Bullis column: Pay Itemized Deductions in 2017
Submitted by editor on Tue, 12/19/2017 - 2:07pm
Since we don’t know what the new tax law for 2018 and later will be, it is difficult to decide what to do before 12-31-17. The proposal indicates the Standard Deduction will be increased and the use of Itemized Deductions on Schedule A of form 1040 will be reduced.
Maybe the best answer for most folks is to pay itemized deductions in 2017 instead of waiting and paying them in 2018.
That means perhaps you should pay the real estate taxes in December 2017.
It also means if you have a home mortgage, you could pay Jan. 2018 payment in Dec. 2017.
Additionally, you could increase the charity deductions by paying extra in Dec. 2017 instead of waiting until 2018. That could be both checks and gifts of non cash items to charity (furniture, clothing, sporting equipment, toys, various household items).
Please note the checks should be mailed before Jan. 1, 2018 to qualify as a 2017 deduction. If the amount is large, consider using Priority Mail, etc. to have a receipt that shows you mailed it in Dec.
Also, if you charge something on the credit card in December, it counts as a December payment, even though you pay the credit card after 2017.
The extra sales tax deduction for large purchases (appliances, cars, furniture) done in 2017 will be another itemized deduction. You will get the regular sales tax deduction based on the total income and how many people in the household. And, if you bought something in 2017 that is an unusual purchase (not done each year), the extra sales tax you paid is also a good deduction.
If you have an investment such as a stock that has gone down in value so much it is worth less than your cost, maybe selling it in December for the capital loss deduction is appropriate. Just remember you can’t buy the identical item back until after 31 days or the loss is not allowed.
Of course you are busy this time of year, but a little attention to get additional itemized deductions could reduce your 2017 income tax. Especially if you will probably not be able to do itemized deductions in 2018 because of the increased standard deduction.
For sales of assets, maybe the Installment Sale method of reporting gain will help you.
Did you hear: “Do not fear going forward slowly; fear only to stand still.” — Chinese Proverb
— John Bullis is a certified public accountant, personal financial specialist and certified senior adviser who has served Carson City for more than 45 years. He is founder emeritus of Bullis and Company CPAs in Carson City.
