Tax cuts forcing last-minute choices

People moving up their 2018 expenses, pushing back their 2017 income.

With the recent tax changes, the usual end-of-year assortment of tax moves is likely more complicated in 2017.

These changes affect everyone from single mothers to millionaires to most sports fans who buy event tickets.

“I’d love to tell you that everyone has a handle on this,” said Mark Bradstreet, founder of the Bradstreet & Co. accounting firm, which has offices in Centerville and Xenia. “I’m not sure anyone does. I would be suspicious if someone said they did.”

Prominent among the changes: The 1,000-page legislation recently passed by Congress and signed by President Donald Trump caps at $10,000 the amount of state and municipal taxes that taxpayers can deduct from their federal tax bill.

Some filers — those with high property tax bills who aren’t using the standard deduction — are scrambling to pre-pay property taxes for the coming year before the cap takes effect, according to national reports. In 2017, that deduction has no ceiling.

While the new tax billlets local municipalities decide whether to allow taxpayers to pre-pay property taxes, it blocked filers from pre-paying local sales and income taxes.

Bradstreet said it’s OK to prepay real estate taxes for most taxpayers. Montgomery, Greene and Warren counties allow filers to pay property taxes early, he said.

“They’re all more than happy to take your money,” he quipped.

If you fall under the alternative minimum tax (AMT) — and if you don’t itemize your deductions — paying property taxes early won’t help, Bradstreet said.

“For most people, though, it’s ‘no harm, no foul’ pre-paying it this year,” he said.

William Duncan, a certified public accountant with Dayton firm Thorn, Lewis & Duncan, said taxpayers should check with accountants to see if they will fall under the AMT in 2017.

Duncan called the tax changes “wild.” With newly lowered tax brackets and higher standard deductions, he said he has clients with seven-figure incomes who will opt to take the standard deduction this year instead of itemizing. That’s the first time in his career he has seen that, Duncan said.

The standard deduction for married individuals filing jointly is $24,000, noted John Venturella, a Dayton shareholder with Clark Schaefer Hackett.

“I think you are just going to see a lot of people using the standard deduction,” Venturella said.

The new law introduces some wrinkles for fans of the University of Dayton or other college and pro sports teams, too.

If you buy University of Dayton basketball tickets in the lower arena and pay for a seat license, current law lets you deduct 80 percent of that as a charitable deduction. That benefit goes away in 2018, Duncan said.

The university is inviting ticket-holders to pre-pay for seat licenses in 2017, Duncan said, which Adam Tschuor, associate athletics director for revenue and partnerships at UD, confirmed.

“It may be to your advantage to pay for next season’s ASP (Arena Seating Program) donation or beyond before Jan. 1, 2018,” the university said in a letter sent to tick- et-holders just last week. “These payments would still be tax deductible under existing tax law.”

Tschuor said the university has always allowed fans to prepay their “ASP dona- tion all the way up to the conclusion of the announced ASP cycle.”

Another change: Your tick- ets for UD, Wright State, Ohio State or Cincinnati Reds or Bengals games will no longer be tax-deductible as a busi- ness entertainment expense.

“If you’re a businessperson and you want to take clients to the UD game next year, you’re not going to be allowed to take a tax deduction for the entertainment value of those tickets,” Duncan said.

For businesses, Duncan said it’s important this year to try to defer whatever income you can, push it to 2018, and pay the expenses you can in 2017.

Most accountants scoff at the notion, pushed by the bill’s proponents, that it has simplified the tax code. For higher-income earners in particular, as well as many small businesses, tax law remains at least as complex as ever. And the bill has injected a new layer of uncertainty because so many changes are temporary and could be reversed in a few years.