I mentioned this in a recent blog post, but it’s now been officially sanctioned by the IRS, so it bears repeating. If you have property taxes that would usually be due in 2018, which are assessed and paid before 2017 year-end, then you can deduct them on your Schedule A with the rest of your property taxes for 2017 as an itemized deduction.

This may be important for those that:

1. will no longer itemize starting in 2018, because the new standard deduction is higher than their combined allowable itemized deductions; or
2. who will continue to itemize in 2018, but will find themselves affected by the new $10,000 cap on deductible property + state income tax.

But caution: there are situations where the pre-payment deduction will not hold up — as this NYT article does a good job of outlining.

More here, direct from the IRS: IRS Advisory: Prepaid Real Property Taxes May Be Deductible in 2017 if Assessed and Paid in 2017 | Internal Revenue Service

UPDATED 12/19/17 — at the last minute, Congress decided to explicitly forbid prepayment of state income tax (but not property tax), so unfortunately, #5 below now only refers to making 4Q 2017 estimated payments, not any payments for 2018.

With tax “reform” looming, there is still a great deal of uncertainty in terms of what the new year will bring. However, there are some tips that are worth taking, given what we do know. I’ve attended three tax update webinars this month and read quite a few articles on the topic, and reduced the list to these essentials:

1. Defer Income into 2018
2. Accelerate Deductions into 2017
3. Boost Donations to Charities in 2017
4. Prepay Property Taxes in 2017
5. Prepay State Estimated Taxes in 2017 (see update above)
6. Harvest Investment Losses Against Capital Gains in 2017
7. Max-Out Retirement Contributions in 2017
8. Pay Deductible Medical Expenses in 2017
9. Pay Miscellaneous Deductible Expenses in 2017
10. Pay For Your Move in 2017

Please click on the links below for more information:

Accounting Today: Six ways taxpayers can make the new tax bill work for them, if they act fast

CNBC: Year-end tax moves to make before tax reform kicks in

Fox Business: Top year-end tips for taxpayers

And for the most astute, intelligent, comprehensible, and clever coverage of the tax bill, I suggest you follow Tony Nitti’s column in Forbes. Here’s his latest: The Tax Bill Is Finalized: Who’s Happy, And Who’s Not?

This particular article breaks it down section by section and identifies the winners and losers. Excellent coverage.

From today’s Journal of Accountancy:

The optional standard mileage rates for business use of a vehicle will increase slightly in 2018, after decreasing in the two previous years, the IRS announced Thursday (Notice 2018-3). For business use of a car, van, pickup truck, or panel truck, the rate for 2018 will be 54.5 cents per mile, up from 53.5 cents per mile in 2017.

Taxpayers can use the optional standard mileage rates to calculate the deductible costs of operating an automobile.

Driving for medical or moving purposes may be deducted at 18 cents per mile, which is one cent higher than for 2017. (The medical and moving expense deductions may be affected by the pending tax reform legislation.) The rate for service to a charitable organization is unchanged, set by statute at 14 cents per mile (Sec. 170(i)). The portion of the business standard mileage rate that is treated as depreciation will be 25 cents per mile for 2018, unchanged from 2017.

Forbes made some interesting points about how the current debate on looming tax reform may limit the use of these rates, however.

The current tax reform proposals would eliminate the mileage deduction for moving expenses and job-related business mileage deductions for employees filing a Schedule A. In addition, both proposals would disallow – on the employer’s side – favorable tax treatment for employer reimbursement of employee moving expenses. However, under Senate version of the bill, the tax treatment of these deductions would sunset, which means that the treatment of expenses would go back to the way the law is now (in 2017) beginning in 2026.

Both proposals would retain the charitable donation deduction, including for charitable miles. And in good news, under the House proposal, the mileage rate for charity would finally be indexed for inflation (it’s been 14 cents per mile since the Clinton era).

Both proposals would continue to allow you to deduct business miles related to your trade or business (for more on the difference between a Schedule A and a Schedule C, click here).

Remember: These are the rates effective at the beginning of 2018 for the 2018 tax year. Assuming that they still apply to you, that means they’ll show up on your 2018 returns (the ones you’ll file in 2019). However, you can still use the 2017 standard mileage rates for the tax return that you’ll submit in 2018. Even if the tax reform bills eliminate certain deduction as of January 1, 2018, those deductions are still applicable for the 2017 tax year.

If you’re looking for 2017 tax rates, including the standard deduction and other tax items, you’ll find them here.

I feel like almost all of my posts over the past few months have been regarding IRS disaster relief. Here’s one more, from today’s IRS E-News for Tax Professionals.

Victims of wildfires ravaging parts of California now have until Jan. 31, 2018, to file certain individual and business tax returns and make certain tax payments, the Internal Revenue Service announced today.

This includes an additional filing extension for taxpayers with valid extensions that run out this coming Monday, Oct. 16.

Currently, the IRS is providing relief to seven California counties: Butte, Lake, Mendocino, Napa, Nevada, Sonoma and Yuba. Individuals and businesses in these localities, as well as firefighters and relief workers who live elsewhere, qualify for the extension. The agency will continue to closely monitor this disaster and may provide other relief to these and other affected localities.

The tax relief postpones various tax filing and payment deadlines that occurred starting on Oct. 8, 2017. As a result, affected individuals and businesses will have until Jan. 31, 2018, to file returns and pay any taxes originally due during this period.

This includes the Jan. 16, 2018 deadline for making quarterly estimated tax payments. For individual tax filers, it also includes 2016 income tax returns that received a tax-filing extension until Oct. 16, 2017. The IRS noted, however, that because tax payments related to these 2016 returns were originally due on April 18, 2017, those payments are not eligible for this relief.

A variety of business tax deadlines are also affected, including the Oct. 31 deadline for quarterly payroll and excise tax returns. Calendar-year tax-exempt organizations whose 2016 extensions run out on Nov. 15, 2017 also qualify for the extra time.

In addition, the IRS is waiving late-deposit penalties for federal payroll and excise tax deposits normally due after Oct. 8 and before Oct. 23, if the deposits are made by Oct. 23, 2017. Details on available relief can be found on the disaster relief page on IRS.gov.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Thus, taxpayers need not contact the IRS to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes firefighters and workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2017 return normally filed next year) or the return for the prior year (2016). See Publication 547 for details.

The tax relief is part of a coordinated federal response to the damage caused by these wildfires and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

Source: IRS Gives Tax Relief to Victims of California Wildfires; Extension Filers Have Until Jan. 31 to File | Internal Revenue Service