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Taxpayers are rushing to claim deductions before the new tax bill goes into effect, and few know what their final bill will be.
According to reports, the tax legislation will be approved before Christmas and bring an end to certain deductions in the New Year. It will cap the amount of state, local, and property taxes individuals can deduct from their federal tax bills at $10,000.
But the new law may also cut into charitable deductions at this time of the year, according to one law professor. That's right, people are getting Scrooged.
Death of Deductions
Reuters reports that financial advisers and accountants are working overtime as many Americans scramble to pay the rest of their 2017 taxes before January 1. That's because the government is taking away various tax deductions next year.
Taxpayers have until January 15 to pay their taxes, but many are paying sooner. Tom Holly of the accounting firm PwC said he received dozens of calls over the weekend from concerned clients.
"It's going to be a very busy holiday season for advisers," Holly said.
Gerry W. Beyer, a professor at Texas Tech University School of Law, says the tax bill may also hurt end-of-the-year giving.
He said many taxpayers wait until late December to make donations to charity. It is a cut-off for taking a deduction in the tax year.
"With standard deductions likely going up, these last-minute donors have less incentive to itemize their deductions, which may lead to fewer gifts to charities," he wrote for the Wills, Trusts and Estates Prof Blog.
Beyer said a "possible abrogation of the estate tax" may also affect charitable donations because high-net-worth taxpayers will be less concerned about the tax consequences of passing their wealth to beneficiaries, he wrote.