CPA offers year-end tax tips before most of new federal tax overhaul takes effect
You may want to make charitable donations or pay off any medical expenses before Jan. 1 even if you can only do so with a credit card.
Those are just some of the potentially money-saving recommendations a local certified public accountant made Wednesday after KATU asked him about the new federal tax law.
"We're all going back to school on it," said Clint Bentz, who admits the tax overhaul is a lot to take in.
Bentz, a certified public accountant (CPA) and partner at Boldt Carlisle and Smith in Stayton, has been in the accounting business for more than 30 years.
He said one big change next year is the standard deduction, which is nearly doubling.
"So many people who were itemizing before, starting next year won't have enough itemized deductions to be able to take advantage of using itemized deductions," he explained.
That's part of why Bentz recommends making charitable donations before Jan. 1. It can also help reduce your income this year when federal tax rates are higher. Federal tax rates for individuals are dropping next year.
He also recommends paying your state taxes before the end of 2017 as well as any outstanding property taxes from this year.
Next year state and local income tax deductions will be capped at $10,000. This year, those deductions are unlimited.
"Those people that maybe were paying their property taxes in three installments if they've got the ability, you know, pay off those other two installments," Bentz said.
Bentz also warns people about new limitations on deducting interest from home equity loans.
"Unless we've actually took out a home equity loan and used it to improve the house starting next year the interest on those loans is not gonna be deductible anymore," he explained.
And Bentz said it's a good time to pay off any medical expenses or go through with a medical procedure.
Previously you could only deduct medical expenses in excess of 10 percent of your income but from this year on you only have to have expenses in excess of 7.5 percent of your income to be able to deduct them.
"You need to pay it. Now, you could pay it on your credit card," Bentz said.
Almost all of these tax cuts for individuals are in effect from next year through the end of 2025.
Bentz predicts most people will pay less in taxes during that time.
Regarding how to pay your state taxes early, Joy Krawczyk, a spokeswoman for Oregon's Department of Revenue, sent KATU an email saying, in part:
"People can make estimated tax payments throughout the year if they have a good idea of the amount of tax they’ll owe. There’s quite a bit of information on estimated taxes and payments here: http://www.oregon.gov/DOR/forms/FormsPubs/publication-or-estimate_101-026_2017.pdf. Or, if the taxpayer already has their W-2, 1099, or other tax-related documentation, they can prepare their return and know exactly how much tax they need to pay."