Here’s a way to boost your last-gasp deduction for state taxes.
Do you have a big IRA? And live in a soak-the-rich state? Run, don’t walk, to your accountant. You’ve got two weeks left to do a Roth conversion that just might save you a bundle.
The pending tax legislation, soon to become law if Trump gets his way, is going to pretty much kill off the federal deduction for state and local income taxes. Obvious ploy: Accelerate some income into 2017, and pay state income tax on it in 2017, too. This may be your last opportunity to deduct those state income taxes.
The easiest way to accelerate income is with a Roth conversion. This moves money from a pretax IRA into an aftertax Roth account. With this move you prepay both federal and state income tax on savings you will be drawing down during retirement.