Since both the House and the Senate bill have the same intentions to eliminate many itemized deductions, now is a good time for itemizers to consider taking advantage of the following tax tips before the end of 2017. It is reasonable to speculate that the final tax bill, once it is signed into law, will go into effect for 2018. Here are some ideas that can help maximize deductions for 2017.
Student Loan Interest
There is talk of completely eliminating the “Student Loan Interest” adjustment to income. The maximum amount of interest allowed is $2500. If you have not reached that amount for 2017, paying January’s statement in December is deductible.
Even though charitable contributions may not be eliminated, losing other deductions like the ability to deduct state and local taxes, unreimbursed employee business expenses, casualty losses and even refinanced mortgages and home equity lines may force many to use the standard deduction. Now is a good time to clean out your closets and garages and take those items to a local charity like Goodwill or Saint Vincent De Paul. There are important things to remember with all cash and non-cash donations:
- Any donation of both cash and non-cash that is worth $250.00 or more needs a signed letter acknowledging the items donated and their value.
- Document all non-cash donations with pictures and an inventory in addition to asking for a receipt.
January’s Mortgage Payment
If possible, pay your mortgage payment that is due in January before the end of 2017 and the interest portion of the payment will be included on your form 1098.
State estimated tax payment
Many states follow the Federal deadline for the 4th quarter estimated tax payment, which is due January 15, 2018 for the 2017 tax year. You can pay the 4th quarter before the end of the year and deduct it on your Schedule A. (At this time, both the House and Senate bills plan to eliminate this deduction for 2018 forward).
Until the tax bill is completed, i.e. passed by both the Senate and the House of Representatives and signed into law by the President, there is no certainty which loss of deductions will make the final draft. However, these tax tips hold up under current law and taking advantage of these ideas can help ease your tax liability for your 2017 income tax return.