Christmas is no stranger to new tax laws. Augustus’s new tax spurred Joseph and Mary to take action travelling to Bethlehem. Here are 5 actions you should consider taking now in light of the new tax law signed by President Trump.
1. Use the new tax calculator
The Republicans deserve credit for passing the Tax Cuts and Jobs Act. But this is not Paul Ryan’s post card. The new tax law is every bit as complicated as the old. Where it helped in expanding the standard deduction, it hurt by removing personal exemptions and incentives to itemize charitable donations or deduct state income, sales and property taxes.
To understand the impact on you, use this calculator by the Tax Policy Center.
Here are the new tax brackets for married filing joint:
2. Make a property tax payment now
If your state income, sales and property taxes combined exceed $10,000 then you should strongly consider making an advanced property tax payment in 2017. In high tax states, that limit is easy to exceed. The new law prohibits making advanced income tax payments but it allows for advanced property tax payments.
3. Small business – beware loss of tax benefits
Many small businesses operate from home. Better maximize deductions now. Here’s what you just lost:
- Home equity loan deduction. Many small businesses took out a home equity loan to fund start-up cost. You can no longer deduct the interest.
- Home office deduction. You can no longer claim.
- Employee business expenses.
4. Give to charity – now.
There is good news/bad news for charitable organizations. Wealthy generous donors will benefit from an increase in the 50% adjusted gross income limit to 60% starting next year. If you are in this category you should wait to give in 2018.
If you are the vast majority of Americans itemizing charitable deductions which fall below $24,000, you will lose the deduction beginning next year. Give now. Your favorite charity will be hurt by this change. They need your support. Maximize your deduction this year and give them a year-end gift. The gift must be given online or postmarked no later than December 31.
If you care about fairness under the law and expressing God’s love for all people, we invite you to give to Gospel Justice Initiative, 1750 Grandstand Place, Ste. 1, Elgin, IL 60123 or securely online at gji.org/donate.
5. Maximize business deductions
The clear winners in the new tax plan are wealthier individuals and larger businesses. The corporate tax rate reduced from 35% to 21%. There are also important complex benefit rules for pass through corporations. In light of this gift, businesses should strongly consider cutting their higher 2017 tax bill now.
- Prepay expenses. Most businesses benefit from an expanded “cash basis” accounting. This allows you to pay and deduct future expenses now.
- Purchase property. Property purchased now through 2022 can be immediately deducted at 100% depreciation. If contemplating new equipment, now is the time to purchase and reduce your higher 2017 tax bill.
- Charities need your help now. Reduce your higher 2017 tax bill while providing significant benefit to communities of need.
Gospel Justice Initiative uniquely invest your donation of $5,000 to manage the opening of a new legal ministry in an area of need. Your one-time investment yields significant ongoing returns in donated legal services, community benefits, and lives impacted for Christ. Listen to our friend, Dr. Renee Gilman, and consider making a life-changing investment of eternal impact. Learn more at gji.org/businessowner.