new tax law state tax payments planning tip

NEW TAX BILL YEAR END PLANNING CONSIDERATION FOR STATE TAX PAYMENTS

In 2018 many will no longer be eligible to itemize deductions because the STANDARD DEDUCTION will exceed their total itemized deductions. Income tax brackets for many will be lower so it makes sense to maximize deductions before the end of 2017. A planning consideration would involve:

STATE WITHHOLDING

STATE ESTIMATE PAYMENTS

STATE PROPERTY TAX PAYMENTS

By paying these amounts on or before 12/31/17 you will get the largest benefit because of a higher tax bracket and you still can itemize these amounts without being concerned about exceeding $10,000 (this is the cap for state tax deductions in 2018). The one concern taxpayers should be careful of, is to have a bill from the taxing authority that you can pay on or before 12/31/17. The deduction could be disallowed on your 2017 Schedule A if the amount you are paying doesn’t have an accompanying bill showing the amount due. Some states are working to change this in these final minutes of 2017.

For the most part a state tax payment made in 2017 will save you more federal tax than one made in 2018.

Rodney W Wicklund and Associates 2011