So, you have two versions of a tax bill, its in conference committee and if history tells us anything, you’ll never know what will come out of it. However, we know a few things that MAY happen. It is highly doubtful that any bill will be effective for tax year 2017.
1. Removal of state income tax deduction. While there may be transitional rules, this is Congress’s chance to give high tax democrat states a big razzberry. So, if you can do so, it would be advisable to pay your 2017 state estimated tax before 12/31/17. That way if the state income tax deduction is repealed for 2018, at least you get a deduction in 2017. And who knows the refund may not be deductible under the new act.
2. If you live in a state with no income taxes, make that large purchase now. The sales tax deduction may not be there in 2018. There are usually great deals the last week of the year at car dealerships who have to pay personal property tax on inventory held on 1/1.
3. Defer any sales of stock if you don’t have to do so. With potential repeal of AMT and lowered capital gains rates, it makes sense to defer.
4. Go see the doctor or dentist in 2017. If you have something that will require a large co-pay (like tooth implants), get it done in 2017 while you still have a deduction.
5. Use Qualified Charitable Donation out of your retirement plan for 2017 it might not be around in 2018.