At the end of December, President Trump signed the Tax Cuts and Jobs Act. This made fundamental changes to the U.S. tax code, including eliminating some key deductions. The new law will go into effect for your 2018 taxes, which means that your 2017 taxes that you file in April of next year will still be determined under the old rules.
Because tax reform eliminated many deductions and made many big changes to the tax code, there are some deductions that are disappearing after this year. You'll want to make sure that you claim these deductions for 2017 if you were eligible, as it could be the last time that you are able to take the deductions unless the law changes again in the future.
A Maryland tax lawyer can provide you with help in maximizing your deductions under the current tax rules that apply for 2017 income when you file your return, and can also provide guidance and advice on what you can do to try to reduce your tax burden under the new tax rules that will be in effect when you file your taxes for 2018.
Make Sure You Claim This 2017 Tax Deduction
One of the biggest changes made in the Tax Cuts and Jobs Act is the change to state and local tax deductions. For decades, individuals who pay state and local taxes, including state income taxes and state real estate taxes, have been able to deduct the amount of money that they pay to the state from their federal taxes. This deduction is called the SALT deduction. It ensures that taxpayers do not have to pay federal taxes on money they paid in taxes to the state.
However, the SALT deduction has been reduced for taxpayers under the Tax Cuts and Jobs Act. Instead of being able to take an unlimited deduction for their state and local taxes, the deduction is now capped at just $10,000 per year. For many taxpayers in high tax areas, including Washington D.C., Maryland, New York, and New Jersey, state and local taxes add up to far more than $10,000 annually. This means that taxpayers could see a big increase.
You can still deduct your state and local taxes paid in 2017 when you file your 2017 tax returns in April, so be sure you do not neglect to take this deduction. You will need to itemize in order to take the deduction, so make certain that itemizing provides you with a bigger refund than just taking the standard deduction would.
Many taxpayers also prepaid their property taxes at the end of 2017 in order to try to ensure they could declare them for one more year. However, it is unclear whether all of these prepayments will be deductible as there has been guidance issued suggesting that if the taxes were not assessed yet at the time they were paid, the deduction would not be allowed.
A Maryland tax lawyer can provide insight into this deduction and into other steps that you should take to ensure you have claimed all of the deductions possible under the current tax law – especially if you will be losing the chance to take some of those deductions in 2018. Contact attorney Kevin Thorn today.
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