On December 13th, the Senate and House Republicans announced they have reached agreement on a unified tax reform proposal. However, it may still be a bumpy road as we await finality on the current tax reform bill. It is always difficult to advise taxpayers at year end, and this year is even more challenging.
If you do believe that a bill will ultimately pass, then there are a few things you might want to look at and be ready to pull the trigger before year end if the legislation contains these provisions:
1) State and local income taxes may no longer be deductible as an itemized deduction. If you normally pay in January, you may want to pay by December 31 this year to ensure you receive the deduction;
2) While the House and Senate bill differ on this, medical expenses in excess of 10% of adjusted gross income may not be deductible. You may want to bulk up items like dental, glasses or hearing aids in 2017 in order to achieve the deduction in 2017.
3) Finally, if your itemized deductions do not exceed $24,000 on a married filing joint return you may want to pay charitable contributions this year in order to obtain the benefit in 2017
Please be assured that we have you on our minds as we review these changes. It is possible that the bill may not be passed until the last minute so be sure to look for communications from us. As always, planning is uniquely personal so feel free to call or contact your local Blue & Co. tax representative if you have any questions.