Tax Tips for 2017
The Tax Cuts and Jobs Act is expected to pass later this week. After proposing their own separate and different bills, the House and the Senate seem to have come to an agreement on what tax reform will look like. A House-Senate conference committee worked to blend the two versions of the Act and signed the final version Friday. Once it passes, it will take some time for the new law to filter down and for us to understand how it will impact you as our clients. However, the new law’s provisions are not expected to impact 2017 taxes.
Today, I’d like to share some tips to consider for your 2017 income taxes.
If you pay estimated taxes, your final 2017 payment is due January 15th, 2018. State taxes are deducted on your Federal tax return in the year paid. If you need a bump in your 2017 itemized deductions, pay your state estimated taxes by December 31, 2017.
HAVE YOU FUNDED YOUR TRADITIONAL IRA OR ROTH IRA THIS YEAR?
The deadline for IRA contributions is April 17, 2018, this year’s filing deadline. If you make your 2017 contribution after December 31, 2017, be sure to alert your account’s custodian that it is a 2017 contribution.
DID YOU MAXIMIZE YOUR 401(K) CONTRIBUTIONS?
Even if you can’t afford the maximum contribution, $18,000 for 2017, $24,000 if you’re 50 or over, you should still contribute the full amount that will be matched by your employer. No reason to leave free money on the table.
OVER 70 ½ AND A TRADITIONAL IRA OWNER?
Don’t forget to withdraw your RMD (Required Minimum Distribution). There is a minimum amount that IRA owners must withdraw from their accounts after they have reached age 70 ½. Don’t forget. The penalty is steep: 50% of the amount required to be withdrawn.
DON’T NEED YOUR RMD?
Give it to your favorite charity. Funds transferred from your IRA directly to a charity can satisfy your RMD requirement AND lower your income. You won’t get a charitable deduction because the IRA distribution is not reported on your tax return, which is even better! Lower income means lower taxes for you and more dollars for your favorite charitable organizations.
YEAR-END CHARITABLE CONTRIBUTIONS REMINDER.
Make sure contributions are delivered to donors by December 31st. If you charge a charitable contribution to a credit card by December 31, 2017, it’s deductible in 2017, even if the credit card bill isn’t paid until 2018. For contributions over $250, be sure that the church or charity provides you with a letter or receipt that conforms to IRS requirements. If your charitable contributions come from your RMD, acknowledgement from the charity is still required. Be sure to get it and keep it with your other tax records. See the IRS Tax Topic for Charitable Contributions at their website: https://www.irs.gov/taxtopics/tc506
OREGON KICKER NEWS
For those of you who paid Oregon income taxes in 2016, expect to see a credit of 6.1% of your 2016 Oregon income taxes paid on your 2017 Oregon tax return. In the past, Oregon has paid the kicker in the form of rebate checks. Now, in order to claim the credit you must file a 2017 Oregon income tax return. If you no longer have an Oregon filing requirement, you may need to file an Oregon Individual Income Tax Return anyway in order to claim the credit. More information can be found at the Oregon Department of Revenue’s website: http://www.oregon.gov/newsroom/Pages/NewsDetail.aspx?newsid=2353
TAX ORGANIZERS COMING SOON!
We’ll be sending out tax organizers to you the first week of January, but please give us a call if you have any end-of-the-year questions or concerns.
Written By Melissa L. Spoharski, EA