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Last call: The clock is ticking on these tax breaks

  • The clock is ticking on property and state income tax breaks.
  • The $7,500 electric car tax credit is also on the line.
Speaker of House Paul Ryan and Senate Majority Leader Mitch McConnell announce the Republican tax reform initiative accompanied by members of the Senate Finance Committee and House Ways and Means Committee on Capitol Hill in Washington DC Wednesday September 27, 2017.
Melina Mara | The Washington Post | Getty Images
Speaker of House Paul Ryan and Senate Majority Leader Mitch McConnell announce the Republican tax reform initiative accompanied by members of the Senate Finance Committee and House Ways and Means Committee on Capitol Hill in Washington DC Wednesday September 27, 2017.

If you're looking for a last-minute tax break on that shiny new Tesla or on your sky-high state income taxes, you may be running out of time.

House Republicans' $1.7 trillion proposed tax overhaul does away with a long list of deductions and credits that filers will likely miss, including tax breaks for moving costs and disaster losses.

Where the Senate will go with its tax bill, which is scheduled for release Thursday, remains to be seen. However, preliminary reports suggest it will also call for a repeal of the deduction for state and local taxes.

Some taxpayers are looking for ways to maximize those at-risk breaks in the 2017 tax year while they still can.

"I got a call from a client who wants to pay in advance for his 2017 tax return," said Jeffrey Levine, a certified public accountant and the director of financial planning at BluePrint Wealth Alliance in Garden City, New York.

"That [tax preparation fee] deduction might be going away," he said.

You can't accelerate all deductions. But here are some last-minute breaks you can maximize before the year ends.

Early property tax payments

Homeowners in New York, New Jersey, and other locales with high property taxes might want to consider jumping on those levies right now. The House version of the tax bill places a cap on property tax deductions at $10,000.

"If you pay these taxes four times a year and you have an installment due in January or February, you can pay it in December and get the deduction [this year]," said Martin Shenkman, a tax and estate planning attorney in Fort Lee, New Jersey.

New Jersey has the highest mean effective property tax rate in the nation: 2.11 percent.

Meanwhile, the three counties with the highest median property taxes are in New York and all three exceed $10,000, according to the Tax Foundation. They are Nassau County, Rockland County and Westchester County.

Pay income taxes now

Since the House bill removes state and local tax deductions, income levies are on the table.

Your federal income tax is technically due on April 15, but you can try to pay that bill in advance. Freelancers, for example, already make such estimated tax payments and pay up every quarter.

If you're salaried, the easiest way to go is to change your withholding on your Form W-4 so that your employer withholds more income tax in December, said tax and estate attorney Shenkman.

The highest individual income tax rate is in California: 13.3 percent.

Last-minute medical

Deductions for medical expenses are on the line in the GOP's bill, so now might be a good time to move up any healthcare costs.

In order to claim the medical deduction under current laws, your costs need to exceed 10 percent of your adjusted gross income. The amount over that threshold is eligible for the deduction.

You may be able to prepay your premiums on long term care insurance now and take the tax break on those amounts.

Cost of select tax deductions

Deduction
Cost 2016-2020
Mortgage interest $357 billion
State and local taxes $368.8 billion
Charitable contributions* $230.5 billion
Property taxes $180 billion
Medical & long-term care expenses $56.6 billion
Student loan interest $11.9 billion
Teacher classroom expenses $1.2 billion
Source: Joint Committee on Taxation Jan, 30, 2017 report *Excludes education- and health-related donations

Other qualified medical expenses that you can claim for now include dental work (generally not teeth whitening), eyeglasses and modifications to your home for disabled individuals.

"If you're already in that phase of deductibility, get as much done this year as possible," said Debbie J. Freeman, director of financial planning at Peak Financial Advisors in Denver.

"We try to pump up itemized deductions in the years they exceed standard deductions," she said. "Often that's dictated by medical costs."

Plug in this credit

Are you in the market for a green car?

The IRS provides a credit of up to $7,500 for electric cars, fully applicable to the first 200,000 qualifying electric vehicles from a manufacturer. The House proposal would toss this tax break.

Whether you snap up a new Tesla (high-end models can exceed $100,000) or a more modest Chevrolet Volt, now might be the time to make the purchase before the year ends.

Roth conversions and do-overs

Time is running out, but if you're able to trim down your income with these tax breaks, perhaps you can convert some money saved in a traditional IRA to a Roth without taking a large hit on taxes.

You pay taxes upfront on the amount of money you convert to a Roth IRA. In the worst of scenarios, the amount that you've converted can push your taxable income into a higher bracket.

On the other hand, if you've already fouled up a conversion in 2017, you may be running out of time to undo that transaction. The GOP's bill will eliminate these Roth "do-overs."

"You might want to consider that recharacterization," said Levine of BluePrint Wealth Alliance. "Your last shot might be Dec. 31."

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