As days get shorter, lights go up on trees and houses, we know it's just a short time before ... TAXES
Let me offer a few suggestions and observations:
- No one here is giving advice - even the professionals (I am not one) - just general information
- If there's a fund/ETF tax issue of interest to you, it's likely of interest to others
- Given the tax bill(s) floating around in Congress, there's a lot more uncertainty this year than usual; try to keep things civil and focused (in that respect, this board seems much better than most places)
Most of us are familiar with the idea of paying January's property tax bill in December, to get the deduction this year for next year's property taxes. Possibly more important now than ever, because assuming couples' standard deduction goes up to $24K. Some people may have been itemizing amounts between $12K and $24K, including property taxes. So in 2018 they likely wouldn't itemize, and thus would lose the benefit of property taxes (even if they're still allowed as deductions) in 2018.
Here's another twist: the NYTimes
reported this week that Marcum is looking into the possibility of prepaying your state income taxes as well.
It's always been possible to do this, sort of. You can overpay estimates for 2017 state taxes, and deduct them now. The thing is is that in 2018 the refunds come back as extra income (which you then deduct again when pay estimated taxes in 2018). That achieves the shifting of the deduction from 2018 to 2017, but at the cost of increasing your AGI for 2018. That can affect things like qualifying for Roths, surcharges on Medicare, etc.
The article talked about literally prepaying 2018 estimates, not 2017 estimates. Whether this would work or not would seem to depend on whether your state will accept 2018 estimates now and keep the money segregated from your 2017 withholding and estimates.
I suppose one could "Ask Marcum":
Comments
http://www.moneychimp.com/features/tax_calculator.htm
Thanks for the topic...
Pre-Paying Property Taxes:
I looked into the prepayment scenario for property taxes. I contacted both my escrow account (mortgage company) and the city that collects these taxes. The city works off of a fiscal year, not a calendar year so taxes due in 2018 reflect only six month Jan-July 2018. My escrow account does make this payment in Dec to my town and my town does receive payment by Dec 31, 2017... so far so good.
I believe one could instruct the mortgage company to move the payment date up (into December 2017) if it falls close the start of 2018, but no guarantees. One could also make a personal payment in December to the town and then be credited (for the extra payment) by the city (later in mid-2018) when they audit their books prior to the close of the fiscal year.
Instructions for Dividends / Capital Gains Proceeds:
Another request I put in to my investment brokerage account was to have all taxable distributions made to "cash" rather than reinvesting these dividends automatically. Since I will have to pay taxes on these gains anyway I figure I might as well have the gains available to pay those taxes. One could also earmark some of this money for income needs or a source of paying for Roth conversions. Also, nothing stopping the investor from purchasing additional shares later. I may use this same strategy in retirement with tax deferred accounts that I may need to draw from (for income or RMDs).
Help with 2018 AGI Calculation:
I am looking for a tool that would allow me to calculate and "play around with" calculating my AGI/MAGI for 2018. I am trying to remain qualified for ACA insurance and each year I seem to chase a moving target (attempting to stay under 400% of FPL). Over the last few years, I have had a small amount of Self Employment income. Though, SE income adds income, it has also qualified me for a number of helpful deductions that actually helped lowered AGI in 2016 and 2017.
Adjustments to AGI are consider "above the line tax deductions'. Here's an article on the topic of deductions:
tax-deductions-above-the-line-standard-itemized-and-miscellaneous
If anyone has similar gestation going on in their head and uses online calculators or spreadsheets that aide you in lowering your AGI, I would be much appreciate the help. Tax reform seems to be adding another layer of uncertainty with the ACA.