You can still take action to reduce your 2017 tax bill.
Such actions must be completed before the end of 2017.
Deductible expenses paid by credit card are deductible in the year they are charged.
As the end of the year is getting close, this is a reminder that Sunday, December 31, is the last day that you can make a tax-deductible purchase, pay a tax-deductible expense, make a tax-deductible charitable contribution, or pay tax-credit-qualifying tuition or expenses for 2017.
Although many businesses, charitable organizations and government offices will be closed for a long New Year’s holiday weekend, you still have time before then to make charitable contributions and pay deductible taxes. If you have a child in college, you can also check to see if you have paid at least $4,000 in tuition and qualifying expenses for that student during 2017. If not, you are permitted to prepay for the first 3 months of the next year’s tuition and count that payment toward your 2017 tuition credit. However, before you do that, please call our office to make sure that this strategy is beneficial for you based upon the tuition amount and your income level.
If you own a small business and make a business acquisition before the end of the year, you can generally expense (write off) the entire cost. However, business acquisitions must actually be placed in service before their expenses are deductible. Thus, do not expect a deduction on your 2017 return if you take delivery after the end of the year—even if you paid for the item in 2017.
A charitable contribution to a qualified organization is considered to have been made at the time of its unconditional delivery; for donations made by check, this is the date that the check is mailed. If you use a pay-by-phone account, the date when the financial institution pays the amount is considered to be the date when you made the contribution.
If you are short on cash, keep in mind that purchases or contributions charged to your credit card are deemed to be purchased when the charge is made.
If you have an overall capital gain for the year so far, you can check with your broker or conduct your own review of your portfolio to find losers that you could sell before the year ends to offset your gains; you could even come up with a net $3,000 loss that could be tax-deductible. Of course, these transactions will need to be completed before the last trading day of the year.
As a reminder, property taxes and both state and local income taxes may no longer qualify as itemized deductions next year, so if you have the funds available, it might be beneficial for you to prepay, before the year ends, the upcoming installment of your home’s property taxes. If you are paying estimated state taxes, you can also pay your 4th-quarter installment before the end of the year.
We wish you a happy New Year and look forward to assisting you with your tax-preparation needs during the coming tax season!