We don’t have much time to take advantage of the current tax code before the new tax bill goes into effect on 01/01/18 so here you go:
Currently, you can deduct the total amount of your state and local taxes (income tax, property tax, etc.) from your federal taxes. The new tax law will cap this deduction at $10,000 starting next year.
So, prepay your property taxes and your estimated state income taxes prior to the end of this year if you expect the total to be over $10,000 for 2017.
The savings can be significant. For example, if your total state and local taxes will be $15,000 for 2017 and you pay it all in 2017, you’ll save $1,750 in taxes, assuming a 35% tax bracket.
This strategy will benefit the highest taxed states, California, New York, Connecticut, etc. Please contact your tax preparer to get an accurate calculation of your potential savings.
Thanks and have a great rest of the holiday season!
Joe Baker, CFP®
Baker Asset Management, LLC
joebaker@bakerassetmanagement.com
