On December 22, 2017, The Tax Cuts and Jobs Act was signed into law. The information in this article predates the tax reform legislation and may not apply to tax returns starting in the 2018 tax year. You may wish to speak to your tax advisor about the latest tax law. This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.
- Trump Proposes Higher Standard Deductions In 2017
- Tax Strategy – Prepay Deductible Expenses In 2016
- Take Standard Deduction 2017
- Deductible Expenses That Can Be Prepaid
One of the tax proposals that President-elect Trump has made, which also falls in line with the general Republican tax proposals, is increasing the standard deduction for single taxpayers to $15,000 and to $30,000 for joint filers in 2017. That is more than double the standard deductions ($6,350 for singles and $12,700 for joint filers) that currently apply for 2017.
There is no guarantee of these higher standard deductions. But since both the House and Senate have Republican majorities, the odds seem to be in favor of this happening.
Assuming the standard deductions are increased, there is a way you can benefit in 2016. If your itemized deductions are generally lower than proposed increased amounts, you might consider prepaying as many itemized deduction expenses as possible in 2016 and then taking the standard deduction in 2017.
Considerations include prepaying your charitable tithing or other charitable obligations, property tax installments, and any state income tax that might be due on your 2016 return. Also, consider any unpaid medical expenses and employee business expenses that might occur.
Call our office to see if this strategy might work for you without triggering the alternative minimum tax. But don’t delay; the expenses must be paid before year-end!