While it is not yet certain what might be contained in the anticipated federal tax reform legislation or even if anything at all will pass, there are a few things that retirees can do to prepare for changes.
Whenever Congress is talking about reforming taxes, the best advice is usually one word long: wait.
Now, however, with Republicans controlling both chambers of Congress and the White House, many people are eager to prepare for the promised tax reforms currently being discussed.
For people in retirement, there are some things that could be done to prepare as USA Today reports in "Retirees: 4 ways you can start planning for possible tax law changes now."
These things include:
· One of the changes being talked about is eliminating the deduction for state and local taxes. Therefore, people who live in high tax states, might want to start considering moving to a more tax-friendly state.
· Congress has discussed increasing the standard deduction. That might make it a good time to create a donor-advised fund to take advantage of current tax law and then donate to the fund later, as necessary.
· While there is talk of eliminating the estate and gift taxes, do not plan for it. Even if they are eliminated, they can always come back later.
Reference: USA Today (Oct. 13, 2017) "Retirees: 4 ways you can start planning for possible tax law changes now."