The “Tax Cuts and Jobs Act” was approved by Congress on December 20, 2017 and signed into law by President Trump on December 22, 2017. This sweeping tax reform act will bring many changes to individuals as well as businesses and is effective as of January 1, 2018.
One of the changes that will affect many taxpayers is the limitation in the deduction for real estate taxes and state and local income taxes. The new law limits this combined deduction to $10,000. In anticipation of this limitation, taxpayers should consider paying 2017 real estate taxes and the fourth quarter state estimated tax payment before December 31, 2017.
The tax benefit from prepaying these taxes does not apply to individuals that are subject to the alternative minimum tax (AMT). Prepayment of real estate taxes is not permitted in some states. Also, the deduction for payment of income tax that is imposed for a taxable year after 2017 is not allowed.
Please contact your Legacy Professionals LLP representative to discuss your individual situation before December 31, 2017. We will continue to keep you informed.
To read more about How The Tax Reform Bill Will Affect Businesses, Click here.
To get further Information For Individual Taxpayers, Click here.
Both articles originally appeared in the Journal of Accountancy and were reprinted (linked to) with permission.
Our Year End Tax Releases and our Rates and Limits Release will be posted on our website as each is finalized. You can find them here.
Legacy News Flash 17-6
Issued 12/22/2017