The Tax Cuts and Jobs Act of 2017 was intended to simplify taxes. However, with heated politics, unclear buzzwords, and overall panic in the mix, the new act is still extremely complex. As a result, you might feel out of sorts trying to make sense of what to do.
Cordasco Financial Network’s goal is to create clarity in times of chaos like this. Below, I have outlined the most prominent factors that matter to you and your wealth in the Tax Cuts and Jobs Act of 2017. Take a look at these key factors and learn about what will be changing next year. This includes action items for you to complete by the end of 2017.
1.) The Tax Cuts and Jobs Act of 2017 eliminates deductions for individuals who pay fees for financial advice:
Until the end of 2017, the amount you spend for financial advice could be part of your itemized deductions. The Tax Cuts and Jobs Act eliminates this miscellaneous itemized deduction. For those whom it will have a material impact, we will recognize the cost of our services for the first quarter of 2018 on the last day of 2017. This will enable our clients who itemize deductions an opportunity to take advantage of this deduction prior to the new year.
2.) Connect with those that are doing your taxes:
Take a look at what can be done before 12/31/2017 that can put you in a better position before 2018. If you can’t reach your accountant, reach out to your financial advisor and ask for advice if he/she is well versed in tax.
3.) Be aware of the change in charitable contributions
The 2018 tax bill changes the way individuals can “count” their charitable gifts. By doubling the standard deduction, itemizers are expected to drop from 1 in 3 tax returns filed to 1 in 20. Now anyone with less than $12,000 of deductions ($24,000 for a couple) will likely have less of a tax incentive to donate clothes, give to their church, or make a sizable donation to charity. You can learn more here.
4.) State and Local Taxes:
Americans around the country are rushing to pre-pay their property taxes for 2018. The new law caps your itemized deduction for state and local taxes at $10,000. If you already have your 2018 assessment and your local municipality allows pre-payment, this might be beneficial to you. Call your local tax collector to find out.
Granted, there is not a lot of time left before the end of the year. However, I encourage you to set time aside and really go through your priorities. If you have questions, feel free to give Cordasco Financial Network a call at (215)-558-3500.
Founder and CEO