December 29, 2017

Taxes: Can you prepay taxes for an itemized deduction this year? Not so fast there, taxpayer ...

Much hubbub currently exists about the recently signed tax legislation and its changes to itemized deductions (Form 1040 Schedule A of) for individual income taxpayers.  Some taxpayers are rushing to pre-pay various 2018 taxes, having read on the Internet (or a similar source) that doing so will result in an itemized individual income tax deduction for 2017.

Not so fast.

First off, always remember that not ever tax and financial item you read on the Internet, or listen to on an AM radio talk show, is true.  Moreover, even it the information is true, it may not apply to your personal situation.  Financial and tax decisions that are in the best interest of one individual or business may be disadvantageous - and simply the wrong decision - for others.

Secondly, any tax that would ordinarily be deductible on an an itemized Form 1040 individual income tax return is not .. I repeat, no ... deductible if the tax has not yet been assessed.  You can send tax money to government agencies all you want, but if the tax has not yet been assessed, you get no itemized deduction benefit.

Thirdly, even if you do get a current-year itemized deduction for pre-payment of 2018 taxes, that may not be in your best interest.  Too many itemized deductions on Form 1040 Schedule A can trigger the dreaded Alternative Minimum Tax, increasing your federal tax bill.

For any tax matter, know what's best for your situation, with professional analysis and advice as necessary.

About Mary Rae Fouts, EA

Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  For more information visit FoutsFinancialGroup.com.

Mary Rae Fouts

2 comments:

  1. Howdy just wanted to give you a quick heads up. The words in your content seem to be running off the
    screen in Opera. I'm not sure if this is a format issue or
    something to do with browser compatibility but I figured I'd post to let you
    know. The layout look great though! Hope you get the
    issue solved soon. Many thanks

    ReplyDelete
    Replies
    1. There is nothing I can do regarding any formatting errors with the opera browser. No one else has mentioned any browser-related problems. I suggest the simplest solution is to use a different web browser when vewing my blog.

      Delete

Thanks for sharing your comments! Comments are moderated before posting to weed out spam.