Well, we seem to have a final tax plan in place, and if everything goes according to what Capitol Hill watchers say, it should pass both the House and Senate this week, and be signed into law by President Trump.
And my, oh my, are there changes.
One that I should point out to you, since I mentioned it last week: Congress put in a change that now means you can NOT prepay your 2018 state income tax to pick up a deduction in 2017 after all. That said, you can pay everything now that you will pay with your 2017 filing (because the last thing you want is to have to pay in 2018 for state taxes in 2017).
Starting in 2018, you can still deduct up to $10K of state and local taxes and property taxes. In high tax states, this is going to hit you hard, because you’ll be losing some of those deductions.
However, there are plenty more deductions to be had under this new regime that *should* offset some of these losses … if you know what you’re doing.
So I’ll be taking the time over future weeks and months to dive into all of these changes on YOUR behalf. Rest assured — we pay attention to these things so you don’t have to. I know that tax software makers and a certain breed of complacent tax professionals are scrambling to catch up, but we’ve been watching these things closely, and our clients in Connecticut will benefit greatly from that attention.
Because, well, the tax code is still complicated. In fact, it’s even more complicated for many brackets and categories. After all, the breakneck speed with which Congress pursued tax reform may well result in certain political victories, but it has also left behind lots of goodies for people in Connecticut who have a smart tax professional in their corner.
Which, ironically, is the one thing true tax reform is meant to “fix”. But in 2018, there will be opportunities all over the place for good planning.
One quick, easy tip: almost everyone, if possible, should delay income for these next few weeks into 2018 if at all possible. Employees often cannot control the timing of their paycheck, but it never hurts to ask. Lower marginal rates across the board for 2018 means that where it’s possible to shift income into 2018, do so.
Again, much more to come on these topics.
I’ll leave you today with my annual holiday prayer. I love this one, and share it every year because it’s more and more pertinent. As we shout past each other online, and it bleeds into our interactions in person (“IRL”, as the kids say) we should remember that there are real stories behind every person.
May we see each other with clear eyes.
2018 Tax Reform Update And A Holiday Prayer from Emelia
“People travel to wonder at the height of the mountains, at the huge waves of the seas, at the long course of the rivers, at the vast compass of the ocean, at the circular motion of the stars, and yet they pass by themselves without wondering.” -St. Augustine
“God, help us remember that the jerk who cut us off in traffic last night is a single mother who worked nine hours that day and is rushing home to cook dinner, help with homework, do the laundry and spend a few precious moments with her children.
“Help us to remember that the pierced, tattooed, disinterested young man who can’t make change correctly is a worried 19-year-old college student, balancing his apprehension over final exams with his fear of not getting his student loans for next semester.
“Remind us, Lord, that the scary-looking bum, begging for money in the same spot every day (who really ought to get a job!) is a slave to addictions that we can only imagine in our worst nightmares …
“Help us to remember that the old couple walking annoyingly slowly through the store aisles and blocking our shopping progress are savoring this moment, knowing that, based on the biopsy report she got back last week, this will be the last year that they go shopping together.
“Father, remind us each day that, of all the gifts you give us, the greatest gift is love. It is not enough to share that love with those we hold dear. Open our hearts not to just those who are close to us, but to all humanity. Let us be slow to judge and quick to forgive, show patience, empathy and love. ”
May your season be truly bright.
Emelia Mensa CPA