Liberty Tax Poll: Taxpayers Likely to Seek Increase in Tax Deductions in 2017 To Deal With Effects of Tax Law
Tax reform is top of mind for taxpayers, and many are looking for ways to use their 2017 tax return to mitigate its effects. In a
“At Liberty Tax, we recognize tax reform as an issue of concern to taxpayers,” said
The Tax Cuts and Jobs Act – as the bill initially was dubbed – nearly doubles the standard deduction for individuals, eliminates some itemized tax deductions, and reduces the State and Local Tax Deduction (SALT), among other things.
Not surprisingly, more than 68 percent of those polled said they are at least slightly likely to seek an increase in tax deductions or credits during the 2017 tax year to counter changes in the tax bill. More than 10 percent said they were extremely likely to seek deductions, and more than 15 percent said they were very likely to seek deductions. When evaluating four deductions or credits that had gotten significant publicity in the tax reform discussion:
- Nearly 50 percent said they likely would increase charitable contributions this tax year. Under the tax law, qualified charitable contributions will remain available to taxpayers who itemize. However, the law nearly doubles the standard deduction, which may mean that fewer taxpayers will itemize.
- About 35 percent said they would likely increase medical expenses and the state and local income and sales taxes. The tax law does not eliminate medical expense deduction as some had feared it might. In fact, the law retroactively decreases the threshold for medical expense deductions to 7.5 percent from 10 percent of adjusted gross income. As for the SALT deduction, the tax law limits the deduction to
$10,000and includes measures to prevent taxpayers from deducting state and local income taxes they may prepay in 2017.
- More than 27 percent said they likely would increase college tax credits. Earlier versions of the House tax bill called for eliminating some college tax credits and deductions. The tax law keeps the college tax credits currently available to taxpayers.
Taxpayers have only days left to make moves that can reduce their 2017 taxes. Those looking to offset the changes in the new tax law will find a few options – such as prepaying property taxes, – which may make sense for them in 2017 taxes.
When taxpayers visit a
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Source: Liberty Tax, Inc.