Blog: 2018 Tax Act
December 12, 2017
Congress is actually moving quickly through passage of a tax act and a potential compromise through a conference committee. Keep your eye out for their final bill as it may make sense to consider the following:
· It looks like we will not be able to deduct the state income tax we pay in 2018. To take advantage of those deductions you might consider paying all of your 2017 state tax in 2017 and not wait until 2018 for any of the payments.
· It may be beneficial to make charitable contributions in 2017. The standard deduction is doubling and the benefit of itemizing deductions, which includes charitable contributions, may well be gone in 2018. Charities are concerned long run. Adding the itemized real estate taxes and mortgage interest and charitable contributions may still exceed the increased standard deduction in a given year.
· One of the possible additional changes is using a College 529 Plan for both elementary and high school students up to $10,000.00 per child. Currently only post-high school educational expenses can be paid from a 529 Plan. Does that mean we need to start saving at birth? In Iowa, of course, you get a deduction, within caps, for 529 Plan contributions. There will be some new caps for both parents and others but this will be a new way to help pay for school.
Sometimes farm parents give farm children a gift of grain that they can sell and use the money for school and college. Children may well be in a higher tax brackets in 2018. Check that out before you do it for 2018.
This blog post is meant for informational purposes only and is not meant to provide legal advice in any particular circumstance or factual situation. You should consult with an attorney prior to taking any action regarding the information contained herein. If you have questions concerning this post, please contact Daniel.Dykstra@heidmanlaw.com.