To Pre-pay or Not To Pre-pay

The new tax law and the cap on the deductibility of state and local taxes (SALT) could necessitate some immediate action by the end of the year or none at all.  First determine if you will be itemizing next year or not.  If you are not this is not relevant.  If you are, step two is to read the accompanying article and CONTACT YOUR TAX PROFESSIONAL!  If you are in need of one call me for a referral.  I have an excellent one.  SALT includes ALL state and local income and property taxes (excluding property taxes on rental properties).  In VA it even includes your vehicle taxes.   Income taxes cannot be prepaid per law so don’t worry about those.  So the next few days may be important for you for saving money.  After consulting with your tax professional you’ll have to see if your jurisdiction will allow you to pre-pay the taxes and which ones, and then if your budget allows it might make sense to pull the trigger and do so.

Remember that it is highly likely if you itemize and employ the proper strategies in response to the new tax laws, or if you take advantage of the doubling of the standard deduction, when combined with the lowering of the marginal tax rates you could see a significantly lower total tax bill!  It’s a different and in many ways exciting playing field and we just need to learn how to play on the new surface.