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Every day I get another email or newsletter about the new tax law. The bill was over 1,000 pages long. It will take some time for the payroll companies to adjust their computer systems to take into account the new law’s rates.
However, many individuals are trying to figure out if there is some tax planning they should do before the end of 2017. I have already written about State and Local Taxes. To the extent possible, for instance, most individuals should make larger charitable gifts this year, since most individuals income tax rates will decrease in 2018. Creating a donor advised fund or a private foundation is one way to receive the charitable deduction while delaying identifying the exact charitable recipient to a future year.
As I have previously blogged, most individual income tax deductions are either eliminated or limited. For instance, miscellaneous itemized deductions which are subject to the 2% floor will be eliminated starting in 2018. These deductions include tax preparation fees, investment fees and tax related legal fees. Therefore, it may make sense to pay these expenses in 2017, when these expenses are able to be deducted, rather than wait to pay them in 2018.
Exactly what makes sense for a given individual will depend on that individuals income and tax situation. Therefore, I strongly advise most individuals to consult their tax advisor before the end of 2017.