President Trump signed the TCJA into law on Friday, December 22, 2017.
The specific applications and appropriateness of these general comments will vary, based on individual circumstances. You should consult your tax adviser before undertaking any of the tactics discussed below.
1. Individuals should consider accelerating charitable contributions into 2017. All other things being equal, the charitable deductions could offset income taxed at a higher rate in 2017. (Also, consider contributing appreciated securities.)
2. In 2018, itemized deductions for state and local taxes will be limited to $10,000. If you were planning to pay in 2018 your property taxes now due, you should consider paying them in 2017.
3. For the same reason in item 2. above, if you may owe state income taxes as estimates in January 2018 or with your 2017 return in April 2018, consider paying those taxes in 2017.
4. Miscellaneous itemized deductions are repealed for 2018. Consider paying your investment fees, tax preparation fees, and unreimbursed employee expenses for which you are now holding an invoice before yearend 2017.
5. If you converted a regular IRA to a Roth IRA in 2017, consider the need for recharacterizing the conversion before yearend 2017. The ability to recharacterize a Roth conversion ends in 2017.
6. If you have a home equity loan, you should consider paying it off soon. In most cases the interest on home equity loans will not be deductible in 2018 and beyond.
7. Businesses should consider accelerating the purchase of depreciable assets into 2017. For such property (other than most passenger automobiles) placed in service after September 27,2017, the cost can be fully expensed in the year the property placed in service. This deduction can offset taxable income taxed at higher rates in 2017.
8. Businesses should consider changing one or more tax accounting methods that could allow more deductions in 2017, rather than 2018. These deductions may reduce taxable income taxed at higher rates in 2017. For certain automatic changes, an extended window of time exists to act.
9. Businesses should consider maximizing retirement plan contributions in 2017.
10. Businesses should consider deferring income, using one or more legitimate ways that exist. This is especially applicable to taxpayers who use the cash basis method of accounting to report their taxes.