In the longer term, the tax changes will have a big effect on your finances.
Most notably, the new legislation almost doubles the standard deduction. That and the disappearance of several key itemized deductions mean that fewer taxpayers likely will itemize. (About 49 million taxpayers, or 28 percent, currently itemize their expenses, according to the Urban-Brookings Tax Policy Center.)
To get ahead of that, he said, consider accelerating your charitable donations to capture the current tax benefit or use a donor-advised fund, which lets you make a charitable contribution and receive an immediate tax break but then distribute the funds over time. (While the deduction for charitable contributions is unchanged in the tax overhaul, you’ll still need to itemize to claim it, and that’s a much higher bar with the higher standard deduction.)
Similarly, prepay your property taxes for 2018 to take advantage of the deduction while you still can, since the new bill limits the deductibility of property taxes and state and local income taxes to a combined $10,000. Check with your local property tax collector’s office to see what your municipality will allow.
And finally, McBride suggests deferring any income you can until 2018, when your tax bracket will likely be lower, particularly if you have commission-based earnings or are self-employed. The same goes for small business owners.
Across the board, each person must determine what moves will work best for their own financial circumstance.
“Everybody’s situation is different. Therefore it’s always wise to discuss your individual situation with a CPA before making these moves,” said Jill Fopiano, CEO of O’Brien Wealth Partners in Boston.
“The time you spend strategizing pays dividends,” said McBride. “Sitting down with your tax advisor is money well spent.”
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