2017 is quickly drawing to a close, but there’s still time to take steps to reduce your tax liability for this year, but 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, beginning in 2018, reduces tax rates and limits or eliminates certain deductions (such as property tax, mortgage interest, and medical expense deductions — though the Senate bill would actually reduce the medical expense deduction AGI floor to 7.5% for 2017 and 2018, potentially allowing more taxpayers to qualify for the deduction in these years and to enjoy a larger deduction).
However, keep in mind that in certain situations these strategies might not make sense for you. For example, if you’ll be subject to the alternative minimum tax (AMT) this year or be in a higher tax bracket next year, taking some of these steps could have undesirable results. Some taxpayers might find themselves in higher brackets next year even with tax reform legislation.
If you’re unsure whether these steps are right for you, consult us before taking action.