The year is quickly drawing to a close, but there’s still time to take steps to reduce your 2017 tax liability — you just must act by December 31:
- Pay your 2017 property tax bill that’s due in early 2018.
- Make your January 1 mortgage payment.
- Incur deductible medical expenses (if your deductible medical expenses for the year already exceed the 10% of adjusted gross income floor).
- Pay tuition for academic periods that will begin in January, February or March of 2018 (if it will make you eligible for a tax credit on your 2017 return).
- Donate to your favorite charities.
- Sell investments at a loss to offset capital gains you’ve recognized this year.
- Ask your employer if your bonus can be deferred until January.
Many of these strategies could be particularly beneficial if tax reform is signed into law this year that reduces tax rates and limits or eliminates certain deductions (such as property tax, mortgage interest and medical expense deductions) beginning in 2018.
Keep in mind, however, that in certain situations these strategies might not make sense. For example, if you’ll be subject to the alternative minimum tax this year or be in a higher tax bracket next year, taking some of these steps could have undesirable results. (Even with tax reform legislation, some taxpayers might find themselves in higher brackets next year.)
If you’re unsure whether these steps are right for you, contact your Somerset advisor at 317-472-2200 or before taking action.