Alert December 07, 2017

Consider Whether to Accelerate Income Tax Deductions

Summary

As you are aware, tax reform is making its way rapidly through Congress and is increasingly likely to be signed into law. While we are awaiting a consolidation of the House and Senate tax bills to learn what the final form of the bill will be, we do know that the final bill is likely to eliminate the deduction for state and local income taxes and greatly increase the standard deduction for the individual income tax, thereby reducing the number of taxpayers who will benefit from itemizing their deductions.

Taxpayers who can still benefit from itemizing deductions in 2017 but are likely to lose that advantage in 2018 should consult their accountants about whether it would make sense to accelerate scheduled or anticipated charitable contributions to 2017.

Additionally, since the final tax bill is likely to repeal the deduction for state and local income taxes, it may be economically advantageous to make fourth quarter estimated payments for state and local income taxes before December 31, 2017, subject to alternative minimum tax considerations.

Again, we recommend that clients consult their accountants to determine what makes the most sense for each individual situation.