As the year-end holidays approach, add some tax cheer for 2017. In fact, you can still make timely tax moves as late as the last week of the year. Consider these five tax-saving stocking stuffers.
1. Charitable donations. Bolster your deduction for charitable contributions with a late donation. Generally, you can deduct the full amount of a donation charged by a credit card as late as Dec. 31, even if you don't pay the charge until 2018. Keep adequate records to back up your claims.
2. Capital losses. There's still time to avoid a big capital-gains tax from securities sales. Any losses "harvested" during the last week generally offset capital gains plus up to $3,000 of high-taxed ordinary income. And, if you still have a remaining loss, it is carried over to next year to offset gains in 2018 and subsequent years.
3. Mortgage interest. If the mortgage is due Jan. 1, 2018, you can increase your mortgage interest deduction for 2017 by prepaying it. In effect, you deduct 13 months' worth of interest. But there's a catch to using this strategy now: You must do it again next year (and so on) to keep deducting 12 months' worth of interest.
4. Tuition. Similarly, if you have a child in college and tuition for the next semester is due in January, you can prepay it in December. The tuition payments generally count toward either one of two higher education credits — the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC) — for 2017. But both credits are subject to phase-outs based on income.
5. Tax advice. Finally, if you pay for tax-related services before the end of the year (including subscriptions to tax publications) the cost qualifies as a miscellaneous expense. You can deduct annual miscellaneous expenses above 2 percent of your adjusted gross income (AGI). Even fees paid to your tax advisor for year-end tax planning count.
Feel free to give us a call to discuss your year-end tax moves. We'd be happy to help!
