When I discuss year-end tax planning with my clients, many of them say they plan to accelerate deductions from 2019 into 2018.
I caution them not to take their eyes off the calendar when they write checks at year’s end. Their efforts to offset write-offs against 2018’s income rather than 2019’s could be thwarted by long-standing IRS rules.
I’ve long ceased being surprised by how many clients scrambling for last-minute write-offs mistakenly believe that just writing “Dec. 31” on checks automatically entitles them to claim 2018 deductions for business expenses, charitable contributions, medical bills and the like. Wrong.
What does an adamant IRS insist they do? Put their payments in mailboxes in sufficient time for letters to be postmarked by midnight, Dec.31. I assure them that as long as they do that, the agency couldn’t care less that their checks reach recipients in 2019.
The IRS also remains unconcerned when taxpayers use credit cards issued by third parties like American Express and Visa. It concedes that taxpayers qualify for deductions as soon as they authorize charges, even if AmEx doesn’t bill them until 2019. But they might be unable to shift write-offs from 2019 to 2018 when they pay with cards issued by stores that bill them directly. No deductions, warns the IRS, until they pay the bills.
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Attorney and author Julian Block is frequently quoted in the New York Times, Wall Street Journal, and the Washington Post. He has been cited as “a leading tax professional” (New York Times), an “accomplished writer on taxes...