Tax Reform – Two Year-End Moves May Save Taxes

IMPORTANT - Each news post on this website is intended to provide general educational information only – we are not providing any tax, investment or financial planning advice or any recommendation for any individual or entity by posting general educational information on this website. You should always consult with your personal tax, investment or financial planning professional about your personal circumstances prior to undertaking any material financial activity, including actions on topics discussed in these news posts. If you would like to discuss any of these matters with us, we would be pleased to do so.


Yesterday, President Trump signed into law the Tax Cut and Jobs Act, which is a sweeping reform of federal income and estate tax law.  The law generally takes effect in 2018.

Under the law’s provisions it may be possible for some taxpayers to save federal income tax by accelerating charitable contributions or state income tax payments into 2017 that they otherwise would have paid in 2018.

This message is general information only, so before you act please check your personal circumstances to see if this will benefit you, or call us and we can help you determine what you should do.

Here is the opportunity.

When you file your federal tax return each year, you deduct the greater of the standard deduction or your itemized deductions (medical expense, state/local income and property taxes, home mortgage interest, charitable contributions and miscellaneous and investment expenses).

In 2018 the standard deduction is going up to $12,000 for individuals and to $24,000 for married couples, and the deduction for state income and property taxes is limited to only $10,000.

This means that for many taxpayers, in 2018 they will take the increased standard deduction and they won’t get any tax benefit from their state taxes paid in 2018 or from their charitable contributions made in 2018.

For those taxpayers, they may benefit from:

  • Making charitable contributions in 2017 that they otherwise would make in 2018.  Charitable contribution deductions are limited to a percentage of your income, and documentation requirements apply.
  • Paying their scheduled 4th quarter 2017 state estimated tax payment in 2017, if they are not subject to the alternative minimum tax in 2017.  Remember that a taxpayer gets no tax benefit from itemized deductions for state taxes if they are subject to the alternative minimum tax.

A great way to make charitable contributions is by donating appreciated investment securities (stocks, mutual funds and ETFs) which you have held for more than one year, as you get a double benefit – a charitable contribution deduction for the value of the securities and you don’t have to pay tax on the gain inherent in the securities.  An easy way to make those contributions is by using a donor advised gift fund, such as the Fidelity Charitable Gift Fund.  You get a tax deduction when you gift securities to the donor advised fund, and you can subsequently decide when and to whom the donor advised fund will distribute your contributions.  You can find additional information and read about the account requirements and restrictions here:

If you would benefit from these items, you should act quickly to complete them by year-end.

We hope you enjoy the holidays with your loved ones.