Financial experts are combing through all of the looming changes in tax code and some Iowans may benefit from taking a few decisive actions before 2018 arrives, though time is quickly running out.
Jeff Strawhacker, a CPA in West Des Moines, says the sweeping tax reforms that passed through Congress and became law last week will have far-reaching affects.
“Almost every Iowan will be impacted to some extent, whether it be through the lower rates, the increased brackets, the increased standard deduction, the cap on deductions,” Strawhacker says. “The question is, how will they be impacted and will it be a favorable or detrimental impact and I think that’s the key question.”
There’s no easy answer to that question, he says, as it has to be taken on a case-by-case basis. One of the fundamental changes that’s coming is in how Iowans, their families and their businesses calculate their federal tax bill. Since most of the changes go into effect next year, Strawhacker says there’s a narrow window of time to make moves that could soften or avoid the impact of crackdowns.
“Consider prepaying the March 2018 property taxes on their residences before the year-end,” Strawhacker says. “That’s due to the $10,000 cap on state income and property tax deductions that goes into effect in 2018 combined with the increased standard deduction.”
Another change that’s coming may influence when and how much we donate money to charities.”Consider accelerating charitable donations from 2018 into 2017,” Strawhacker says. “With the increased standard deduction that goes into effect in 2018, they may not receive a tax benefit from those donations but if they move them into ’17, we probably have a better chance of getting some tax benefits.”
The tax law change may result in a dip in contributions to some charitable organizations, but Strawhacker thinks most people donate to such agencies because they want to, not just to get a tax break. Iowans who want to make some changes in their financial pictures will need to get busy.
“There’s not a lot of time to do much more before year end,” he says, “but I think the bigger key now is to look forward into 2018 and future years and determine what changes you might need to make going forward.” He notes, CPAs aren’t only useful for preparing your taxes, but also for helping you to make sound financial decisions year-round.