The GOP has high hopes of getting its tax reform bill to President Trump’s desk before Christmas but if that doesn’t happen, it will likely get approved in the first quarter of 2018. Even if the legislation is not approved by the first of the year, it will almost certainly be retroactive to January 1st so that Americans will experience its full effects for the entirety of tax year 2018.
Negotiators are currently working feverishly to reconcile the House and Senate plan and, even though we don’t know the final form this bill will take, we can gain some assurances from the recommendations these two proposals have in common. For example, both the House and the Senate bill are proposing the elimination of deductions for both property taxes and state taxes.
So, depending on the size of your property tax bill and the state you live in, some of these deductions may offset the tax savings the reduction in tax rates might bring about. With that in mind, here are two tax-saving recommendations you may want to consider before the end of 2017:
- Prepay Your 2018 State Taxes: By prepaying these taxes, you’ll be able to deduct them on your 2017 taxes. Depending on the size of your state tax bill, this could save you thousands.
- Prepay Your 2018 Property Taxes: If the municipality in which you live allows for the prepayment of property taxes, it might make sense to pay your 2018 property taxes in 2017 while they can still be legally deducted.
If you have the disposable cash today, these two recommendations alone could save you thousands on your 2017 taxes.
Remember, Donald Trump hopes to get a bill on his desk by Christmas. If he does, you’ll be able to see the exact language of the new law before the year is over. In that case, you would still have time to make these tax saving moves with confidence. However, if you make these moves now, and the law doesn’t get signed by the end of the year and the new law doesn’t eliminate the deductibility of these two taxes, you risk losing liquidity, use and control over these dollars in 2018. It’s a small risk, but it’s worth mentioning nonetheless.
Regardless of what form the final bill takes, I’m convinced that it will represent a net tax savings for most Americans, especially those for whom Power of Zero planning is a good fit. For that reason, the next 10 years will represent an historic opportunity for those who embrace the zero-tax paradigm! Will you be ready?
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