NEWS LETTER December 20, 2017 by AUSTIN TAX SERVICES INC, 910 Portland Ave, Gladstone, OR 97027 Office Phone 503-657-0039; Fax 503-650-8888; Website www.AustinTaxServicesInc.com
Last-minute scrambling on the part of Congress to pass sweeping tax reform legislation has made this an especially challenging year for taxpayers to implement strategies to cope as they try to plan for the best tax outcomes. Proposed changes will not be made retroactive to 2017 but will apply to 2018 and later tax years. Provisions include reductions to tax bracket rates, increasing exemption limits and phase-outs from individual Alternative Minimum Tax, eliminating personal exemptions altogether while nearly doubling the standard deduction, limiting the mortgage interest deduction, and imposing a $10,000 deduction cap on a combined amount for real estate taxes and either sales tax or state and local income taxes – a particular disadvantage for many residents of Oregon and other high-tax states.
Most people could benefit by deferring income to 2018 and accelerating deductions into 2017. Some ideas: IRA owners who turned 70 ½ this year might consider waiting until 2018 to take their RMD, unless they would be in a higher tax bracket; Think about delaying any planned conversion from a Traditional IRA to a Roth IRA until 2018; Wait to sell property until 2018, or at least sell it on installment plan; Pay any remaining property taxes still owing from 2017 or prior years before the end of 2017; Make your January mortgage payment in December so more of your mortgage interest can be deductible in 2017; Maximize your charitable contributions this year – mail or charge monetary donations by 12/31/17 and for household goods you donate keep good records of what you gave, assign fair market values and get receipts; Prepay any expected state income tax liability for tax year 2017 in December instead of waiting until 2018 to make the final estimated payment or to pay a balance due when you file your tax return.
Education Credits and Student Loan Interest deduction remain in place in the tax code. Be sure to keep track of the individual expense details and the timing of your payments, as the 1098-T form is not enough by itself to calculate the credit accurately.
If you have dependent children or students who need to file a tax return, we encourage you avoid the potential for having to file an amended return by having us prepare their tax returns. That enables us to be sure education credits, filing and dependency status and health insurance information all mesh correctly with their parents’ return. We offer generous discounts on dependents’ tax return preparation.
Identity Theft and Scam attempts supposedly from IRS through phone calls and e-mails and sometimes even letters that demand money continue to be a problem. Never call these numbers back or click on links in such e-mails. Instead, contact our office so we can help you take steps to verify the authenticity of the claims.
IRA Contribution Limits for 2017 remain at $5500 ($6500 for those age 50 or over as of 12/31/17). If age 70 ½ or older, be sure to take your RMD (required minimum distribution) from your IRA or employer’s retirement plan by 12/31/17 (unless you’re delaying your first age 70 ½ distribution for tax planning purposes).
Standard Mileage Rates for 2017: Business, Farms & Rentals 53.5 cents/mi; Medical & Moving 17.0 cents/mi; Charitable 14.0 cents/mi. Mileage Logs or other written forms of documentation should be maintained throughout the year. For each vehicle you own, record beginning of year and end of year odometer readings so we have the total miles driven for calculating your percentage of business use.
The Oregon medical subtraction rules are for taxpayers age 64 and over. Keep track of all medical expenses, including mileage, separately for each person in your household so we can figure this correctly.
We will be closely tracking how all the changes to the tax code potentially impact our clients so we can advise you on the best options that apply to your individual situation. We encourage our clients to contact us for tax planning during the year as life events occur.