As I write this on Dec. 6, 2017, no one can be sure what tax law changes are in store for 2018. The U.S. House and Senate have each passed their own version of tax reform, but have not reconciled the differences. Nevertheless, there are some things you can do yet this year that may help reduce your tax burden either this year or next.
1. Itemized Deductions: Both House and Senate version practically double the standard deduction regardless of your filing status. This will be major tax break for most people, but not as much, if at all, for people who in the past have had itemized deductions exceeding the standard deduction.
What you can do
Take as many of these deductions this year as possible. For example, if you were planning to make a charitable contribution in 2018, make it this year instead. If you were planning to wait until next year to pay your property tax bill, make the payment this year instead. If you are planning to purchase a “big ticket” item like a car, boat or RV next year, you may want to consider buying it this year. Both versions repeal the sales tax deduction.
2. Roth Conversions: The House version of tax reform abolishes the option of converting a Traditional IRA to a Roth IRA. You may want to take advantage of this before that option is no longer available.