Possible tax considerations
- Review your W-2 tax withholding and update it when needed. Since the new tax code curbed many itemized deductions, some taxpayers might take advantage of the new standard deduction, and personal exemptions are eliminated could mean additional withholding might be necessary
- Review your Schedule A, itemized deduction list, and strategize accordingly. The $10,000 cap on the amount of State, local, sales, and property tax you can claim could mean an incentive for people to examine their property assessments and challenge it and try to get it reduced as much as you can
- Revisit your investment fee structure. Starting 2018, taxpayers can no longer deduct investment and custodial fees, trust administration fees and other expenses for managing investments that produce taxable income. It may be beneficial to look for different brokerage firms such as online brokers or robo investment apps that offer lower or no investment fee.
- Timing of divorce settlement matters. Since alimony will not be available as a deduction for couples who finalize their divorce and separation after Dec. 31, 2018, the person who is likely be responsible for paying the alimony now has the incentive to speed up the settlement before the end of 2018. The recipient will be benefited from dragging the settlement to next year as alimony payment will not be considered as taxable income starting 2019.
- If you are planning to make donation to charitable organizations, for people who are 70 1/2 years old or above, and have been taking the required minimum distribution on your retirement account, can utilize direct rollover method to make charitable donation and avoid taxation on the required minimum distributions.