Moves due to tax bill passage

[gayl]

Interested in year end moves due to passage. I'll start:

Paying April property taxes 12/29/17 instead of 4/1/18

Future trading in IRA instead of brokerage so I can do 1040A (think Sch D stayed)

[Senator]

Waiting until 2018 to do a $65K Roth conversion... I was going to wait until the market corrected a bit, I am still waiting...

[walkinwood]

If you are unlikely to exceed the standard deduction next year, bundle charity giving and create/fund a donor advised fund before the end of the year. Use appreciated securities/funds. Take the deduction in 2017.

Time is running out for this move. Check cut-off dates if you haven't already started this process.

[Scuba]

Paying our property taxes early would result in a corresponding increase in AMT for us in 2017 so we can’t do anything to help with the SALT limitation next year.

Probably going to pay off our HELOC since that interest will no longer be deductible.

[l8_apex]

Quote:

Originally Posted by Scuba Probably going to pay off our HELOC since that interest will no longer be deductible.

Can you give me a little detail on this please? I was planning to apply and take out a HELOC in 2018. I hadn't heard of anything in the tax bill that affects the deduction of the interest on HELOCs, but it feels like information overload any time I look at news stories on the tax legislation.

[Curmudgeon]

Quote:

Originally Posted by walkinwood If you are unlikely to exceed the standard deduction next year, bundle charity giving and create/fund a donor advised fund before the end of the year. Use appreciated securities/funds. Take the deduction in 2017.

+1. Recently set up a DAF and funded it for a couple years (planning to do every-other-year charitable bunching), but now that it's unlikely I'll itemize again I'll probably fund it a bit more.

[gayl]

Quote:

Originally Posted by l8_apex Can you give me a little detail on this please? I was planning to apply and take out a HELOC in 2018. I hadn't heard of anything in the tax bill that affects the deduction of the interest on HELOCs, but it feels like information overload any time I look at news stories on the tax legislation.

interest on mortgages & HELOC for acquisition & improvements will be deductible on 750k of loan. Interest on HELOC for debt consolidation won't be

[Big_Hitter]

Quote:

Originally Posted by Scuba Paying our property taxes early would result in a corresponding increase in AMT for us in 2017 so we can’t do anything to help with the SALT limitation next year.

we are in the same boat

[dvalley]

Here's a quick video/article I found on the topic: Tax moves to make before 2018 - Video - Personal Finance

[OldShooter]

Quote:

Originally Posted by gayl ... Paying April property taxes 12/29/17 instead of 4/1/18 ...

I read that there is an IRS opinion that this won't work.

[W2R]

I'm not doing anything, because I never have enough deductions to itemize now that I am retired, mortgage free, in a low SALT state, and with what I regard as low taxes already (7% of my AGI last year). I finally dared to try the calculators for the old vs new taxes. It looks like in my case, my taxes under the new rules will be even lower than that, without doing anything at all, bringing them down to about 5% of AGI. But, we'll see. Anyway, any further reduction is almost venturing into the trivial, and it hardly seems worth the effort to lower my taxes further.

Sure makes life simple for me. Wishing you all some productive tax planning this week and next.

[younginvestor2013]

My understanding is that in 2018 you can still itemize/deduct up to $10k in state and local taxes. So unless your RET and state income tax paid will be greater than $10k in 2018, then there is no pressure to pay RET before year-end.

Or am I missing something?

[Big_Hitter]

Quote:

Originally Posted by younginvestor2013 My understanding is that in 2018 you can still itemize/deduct up to $10k in state and local taxes. So unless your RET and state income tax paid will be greater than $10k in 2018, then there is no pressure to pay RET before year-end. Or am I missing something?

I don't think so - $10K is pretty low if you live in a state that has personal income tax and you own a home

[younginvestor2013]

Quote:

Originally Posted by Big_Hitter I don't think so - $10K is pretty low if you live in a state that has personal income tax and you own a home

Agreed! I am sure it is easy to hit that figure if you live in areas like Westchester NY or LA, SF, etc. Just wanted to make sure I was understanding correctly.

[scrabbler1]

Earlier in the year, my plan was to take the standard deduction in 2017 and do some bunching of deductions in 2018, mainly for state income taxes, the big item I can bunch into one calendar year because I can pay the 4th quarter's estimated state income taxes in either of 2 calendar years. I didn't have any unusually large med expenses in 2017 which, unlike in 2015 and 2016, kept my itemized deductions below the SD when I don't pay the 4th quarter 2017 estimated state income taxes in 2017 but in early 2018 instead.


When the estimated cap gain distributions came out in early November, this bunching plan looked even better because those deductible med expenses fell some (10%-of-AGI exclusion rose when one MF I own planned a huge distribution in late December).


But once the tax reform bill began gaining steam, my plan to bunch deductions into 2018 while taking the SD in 2017 went away. I will now pay my 4th quarter estimated state income taxes in a few days and itemize in 2017 while taking the SD in 2018 (and probably every year thereafter). I also made sure to make my charitable donations this year including a donation of old clothes.


Now if I could only escape the ACA subsidy cliff.......

[FIREd]

Quote:

Originally Posted by W2R I'm not doing anything, because I never have enough deductions to itemize now that I am retired, mortgage free, in a low SALT state, and with what I regard as low taxes already

+1.

[pb4uski]

Quote:

Originally Posted by gayl ...Paying April property taxes 12/29/17 instead of 4/1/18 ...

Quote:

Originally Posted by OldShooter I read that there is an IRS opinion that this won't work.

Any details OldShooter?

[Big_Hitter]

Quote:

Originally Posted by OldShooter I read that there is an IRS opinion that this won't work.

if you are paying 2017 property taxes in calendar 2017 that aren't "due" until 2018 how can that not be okay?

for example, we pay property taxes in arrears - our 2017 taxes are due in two pieces, half at the end of december and half in 2018

if I pay both pieces today how can I not itemize all of that in the 2017 tax year?

[gayl]

Quote:

Originally Posted by younginvestor2013 My understanding is that in 2018 you can still itemize/deduct up to $10k in state and local taxes. So unless your RET and state income tax paid will be greater than $10k in 2018, then there is no pressure to pay RET before year-end. Or am I missing something?

with the new SD I won't itemize in the future. My prop tax = 3k + FTB = 5k .... trying to figure out how to do just the 1040A from now on. So 2017 = prop tax 4.5 (3 pymts) + 5k. I read you can pay prop taxes already billed as in past years just not prepay in income taxes

[MichaelB]

According to my tax advisor, property taxes can be prepaid as long as the taxing authority is accepting prepayment. In other words, it can’t just be a credit to an account, it must be applied to an assessed or estimated current or future tax liability.

An early payment of a second installment would qualify, as would an early payment when the county has not yet assessed but offers to accept prepayment and apply to the upcoming assessment.

A payment where there is no acknowledgement of forthcoming liability would probably not qualify.