Slightly more complicated , @makemesmart , but you’re right about it depending on whether you should still be using itemized deductions in 2018.
you forgot to include medical expenses in your list of salt+mortgage interest+donation
Also, as others have noted, paying your 2018 taxes in 2017 may help some folks, but others might get hit with the AMT, so it won’t matter.
Sorry about those of you who are standing in line. I figured this all out when the conference bill was released, so I used my bank billpay to schedule the payment for 12/22 and I can now verify online that the tax assessor shows it as being paid the same day… (I am no where near AMT territory and there is no way that even with full deductions that I would itemize in 2018; however, my itemized deductions would be around $9000 – so less than the new standard deduction, but less than I would have with itemization + personal exemption.)
Paid off the 1/2 of the property taxes that aren’t due until April. Also paid state taxes on my relatively modest consultant fees although dh said it didn’t matter whether we paid those now or when we filed our 2017 taxes.
I’m in the process of opening a donor advised charitable account on Schwab but am stuck. We’d like to fund it using stocks that have appreciated significantly. That’s not an option online. That office is closed until morning. Since tomorrow’s the last business day of the year, I hope it’s not hard to get through. The rep through the general Schwab line, available 24/7, wasn’t able to help me.
@collage1, It is possible to fund the Schwab Charitable Account online but I’m not sure if you can do it from a smart phone. Using either an iPad or laptop/desktop, just open your newly created account and select “Contribute to my account” from the menu tabs at the top of the screen. Midway down the page that opens will be a blue “select account” tab. From there you can open each eligible brokerage account and choose how many shares of each security you would like to transfer. It’s a great way to put capital gains to use for years to come while harvesting the deduction for this year. It’s unacceptable that the phone rep couldn’t help you with this. If you run into problems ask to speak to a supervisor, Schwab is pretty good at getting you to the right person eventually.
It looks like I may still be subject to AMT next year, so I am not prepaying my general taxes. I previously prepaid my school taxes, which is allowed in my municipality in order to get some money out of my account before filing FAFSA. I can’t prepay my state income taxes as I am a W-2 employee and I can’t prepay H’s because I have no idea how much he will earn.
I think this new tax bill will stink, at least for me.
@collage1 for the donor advised charity funds, why do u have to open it this year? We r considering it for going forward charity donation starting 2018.
I can’t answer for anyone else, but we opened a donor advised charity fund this week in order to take the tax deduction in 2017. Next year we’ll be using the standardized deduction. We expect the fund to cover donations for about a decade.
@Silpat in theory u could still use the itemized deduction next year if ur charity fund amount+salt+mortgage interests is larger than $24,000?
^^Salt capped at $10,000
@makemesmart , I’m no tax expert and hesitate to answer that.
FWIW, I think, but am not certain, that as long as your mortgage is <$750K and your property tax is <$10K, then you could use whatever your combined deductions are if they exceed the standard of $24K. We happen to live in a low property tax state, and we don’t have a mortgage, so it made sense for us to fund the account this year as well as prepay our 2018 property tax.
Let’s hope one of the posters who knows more about the new tax bill will see and answer your question.
@happy1 I am not an expert either but I believe u r correct and I agree in ur situation it makes perfect sense to open the charity fund this year to take advantage of the itemized deduction for 2017 and use standard deduction going forward (or till the next tax bills!).
The 750K limitation is for new mortgages, so you can still deduct up to a million for current mortgages.
If you will be taking the standard deduction in 2018, then your best strategy is to bring as many deductions as you can into 2017 (assuming you are itemizing in 2017), as long as it doesn’t put you into AMT.
And remember that the $10k limit is not just property taxes, but all state and local taxes - income tax, property tax, personal property taxes, etc.
A tip from my accountant, applicable to people in high tax brackets and that have their own businesses:
With the new $12k standard deduction, you can hire your kids and pay each one up to $12k. This income will be free of federal tax, but still subject to SS, Medicare, and state taxes. The cost to you is the other half of payroll taxes and unemployment. Of that $12k, $5500 can be invested in a Roth IRA, which will grow but never be taxed.
@momsquad and @makemesmart, thanks for trying to help. Finally got through to the charitable account (special) rep today at Schwab (53 minutes on hold – I was not alone!), I finally got the info and clarification I needed.
Just in case anyone else is unclear on this, you CAN fund the account with stocks but the Schwab charitable fund is a 501©3 and the stocks are sold as soon as you fund the account. You then have to select the type of investment you wish your money to be, well, invested in. There were about 12 categories to choose from.
Once I went to create and fund the account today, I got an error message. Per the CSR’s advice, I had to complete the application online, print it out, sign it and then send it via the message function. I was told it wasn’t necessary but I went and dropped the original off at our local Schwab office. I was told that, even if they don’t process it until after December 31, it will be backdated to today.
Hope this helps someone else out there if anyone is trying to create a donor advised fund and gets stuck.
I hauled a couple huge bags of clothing to Salvation Army right after Christmas, planned to do more before year end, but have been too busy with gatherings and luncheons the last few days, won’t have time to organize more. Just have to do it in 2018, losing the itemized deduction, but won’t stop me from donations, who wants to keep all that extra stuff in the house??
Experts indicate that the tax reform will hurt donations to charities, especially from low and middle class income brackets, who donate mostly to organizations like Salvation Army, Goodwill etc.
Will tax reform affect your donations?
We’ve been decluttering anyway, so donated lots of books to the Friends of Local Library, clothing to homeless shelter and miscellaneous stuff (mainly toys and games) to Goodwill. We will continue to do that even if we can’t deduct those donations in 2018 and beyond.
Not so sure if we’ll make as many cash donations in the future. The lack of the deduction is part of it, but we’ll also be retired so our budgeting will change.
We make our charitable donations because we want to help the recipients…the tax deduction was just an added bonus. We will continue to make the same donations as long as we are financially able to do so.
@thumper1, I totally agree. Just hope most people feel the way we do.
Salvation Army is close to us, so it is basically the one place we deal with. Haven’t tried the “pick up” option from some other organizations. Are they ok in general?
@Hopeful820 we have used the Goodwills pick up service to haul away some large old electronics and it worked well.
We will still be doing itemized deduction in the future and our donation won’t change much, however we are considering the donation funds.