Here are some tax tips from the IRS to review and act upon prior to 12/31/2017. CLICK HERE for full article.
I have received numerous calls on whether to prepay real estate taxes prior to yearend. It appears that most counties are allowing this. We have run out of time to analyze each specific situation so I will try to answer this question along with other ideas/suggestion in a general manner.
I suggest you review this Washington Post article for some good tips that maximize 2017 deductions that you may not be able to use in 2018.
New Standard Deductions for 2018 should be $12,000 for single, $18,000 for head of household and $24,000 for married filing jointly. First look at your 2016 tax return, schedule A if you normally itemize. If not much has changed in your life, then use the the bottom number on Schedule A( line 29) to see if you are close to the new standard deductions. If not, then prepaying real estate taxes may give you a nice savings to claim in 2017 as you probably will not use them in 2018. With that being said, you will get a bigger refund in Illinois in 2017 but don’t expect any property tax credit as part of your overall filing/refund in 2018. Also, prepaying real estate taxes probably won’t work if your property taxes are escrowed by your mortgage company (please consult your lender) AND you have to have the money available to prepay. Note that under the new laws there is a cap on Schedule A lines 5 thru 8 of $10,000 so if your line 9 total is over $10,000 you will be limited on your deductions in 2018.
If you are under the new standard deduction rates for 2018, but have normally itemized in prior years, boost up your charitable contributions – both cash and non-cash prior to 12/31/17. If you are not working and normally get sales tax credit as with most retirees and are considering a major purchase like an auto, maybe take advantage of purchasing prior to 12/31/17 to be able to deduct the sales tax. If you normally deduct unreimbursed employee expenses on Schedule A consider prepaying or buying items before yearend (Lines 21 to 23 on Schedule A).
If your total deductions are greater than the new standard deductions, there is still no guarantee that you will be itemizing in 2018 as certain deductions are increased (as in medical), certain deductions are capped (as in income/sales tax plus real estate taxes cannot exceed $10,000) and other deductions are simply eliminated as in unreimbursed job expenses. See this Forbes article that I feel gives a good review of the changes for 2018.