While the 2017 election season pales in comparison to last year’s cycle, it is no less important for those who are in office on Capitol Hill and in state legislatures around the country. Senate Republicans may be feeling the pressure of producing at least one major piece of legislation before the year is out, and after the failure of health care reform, tax reform is a worthy goal.
According to several media sources, Senate Republicans will introduce their tax plan this week. It is rumored to be an ambitious agenda aimed at lowering corporate income taxes and easing the financial pain on middle class families.
Indeed, it is anyone’s guess whether tax reform will become reality in 2017, but it is always good to be prepared. With that said, doing some tax planning before the year ends is prudent. This post will highlight some basic tax planning moves that could help you in 2018.
Three ways to reduce your tax burden
Defer income – If you are expecting a bonus, it may be to your benefit to defer it to 2018. The same could be said with end of year invoices that are yet to be paid if you are a business owner. Holding off on these last payments may keep you out of a higher tax bracket.
Contribute to your 401(k) – If deferring income isn’t an option for you, putting the extra income into a 401(k) plan is a good way to avoid crossing into a higher tax bracket. It is difficult to reach the $17,500 limit to put into a 401(k), so feel free to add extra cash if you can.
Make an extra mortgage payment – If you make your January 2018 payment by December 31, you can deduct the mortgage interest for your 2017 taxes. So it would be like getting credit for 13 mortgage payments for 2017.
Consult an experienced tax attorney
Even if you are not able to make these changes, or they don’t apply to you, an experienced tax attorney can give practical advice in other areas so that you can make informed decisions. Perhaps you owe additional taxes that you cannot afford to pay at the moment, or you are being pushed into a payment plan that may not be in your best interests. A skilled lawyer can guide you through the process and help negotiate a deal that works for you.
The preceding statements are not legal advice. For specific questions regarding your situation, an experienced attorney can help.