What is the status of AGI reductions in 2018 US individual tax returns?
It is anticipated that the GOP tax reform will be become law this afternoon. In anticipation of that I was doing some last minute 2018 tax planning as it applies to deductions.
Currently my joint return (for 2017) shows a reduction in AGI of 23,300 (Standard deduction plus personal exemptions). Media reports say that the joint 2018 Standard deduction will double to 24,000 and the personal exemption is eliminated. By my calculation (for me) that is a net change of 700 dollars (+3%), not 12,000 (+100%).
Whether or not the standard deduction doubles or not is insignificant, what matters is the change between AGI and Taxable Income for those of us who do not itemize or have to decide whether to itemize of not.
Is there something I'm missing in the status of reduction of AGI in 2018 that would cause me to (for example) prepay charitable contributions or property tax?
I'm not sure how to do this, but the answer to this question is provided in another SE question specifically: Stack exchange question - elimination of additional Std. Deductions
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If you expect to use the standard deduction in 2017, then you likely won't want to do anything: not much changed for you, really. They took the 00 personal exemptions you had before, and removed them, and took the 700 standard deduction you had before and added 300 to it. So you should see an decrease of 00 in income from your taxable income (or an increase of 00 in income excluded from your taxable income). If you're only seeing 0, then you have another 00 above the line excluded income; depending on why that 00 is excluded, you may or may not still get that exclusion.
The purpose of this was not to significantly decrease your AGI exlusions; rather, the purpose of this was to simplify taxes for many people who currently itemize in the old system but would not in the new system. Not having to itemize means a much simpler filing process (such as the ability to use a simpler form, possibly), and the addition of 00 to the total is intended to make up for some of the itemizing. (This doesn't mean it will be equal for all parties, of course, nor that I am defending the idea, simply providing the stated rationale.)
If you are, in 2017, on the border of itemizing or not, and do have the ability to shift property tax payments from 2018 to 2017 (or other deductions), it's possible you would benefit by doing so. You should only do so if your 2017 taxes will be reduced, however - you shouldn't consider the 2018 taxes for this purpose; they're likely fixed regardless of your choice (if you indeed take the standard deduction now, you'll certainly want to in the future if your financial situations stays the same).
Most of the people who would benefit from shifting property tax payments from 2018 to 2017 are people like me who currently itemize (in 2016 and 2017) but will likely not itemize in 2018.
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