The income tax Bill made progress through the Senate this week to make substantial changes in the formula to calculate your federal income taxes. Many of these changes will have a negative impact on your income taxes. The Bill is not guaranteed to pass, but, the probability is high that it will become law.
The next step is for the joint conference between the House and the Senate to hash-out their differences. These differences are significant, and we cannot forecast how they will be reconciled.
We had an opportunity to pose a direct question to Congressman Charlie Dent as to his estimate of when we will see the final version of the bill. He could not make an estimate – there are too many variables.
No matter when we see the final version, there will be very little time to figure out how it affects you, and to take advantage of year-end tax planning opportunities. For example, some experts predict 90% of taxpayers will not itemize after 2017 if the Bill becomes law. This means 2017 could be the last year 90% of taxpayers can deduct charitable contributions (those affected taxpayers should consider prepaying 2018 and 2019 charitable contributions before 12/31/17). We will not know for sure which of these strategies are right for you until we see the final version of the bill. So, we will stay alert.
The Weekly Commentary will continue to report on this time critical topic as it is finalized.