Year-End Tax Planning

Tax planning is rarely easy, but this year it is especially challenging.  At this writing, Congress has passed tax reform and the bill is headed to President Trump to sign.  In the meantime, taxpayers are advised to rely on sensible strategies that are likely to remain in effect, at least for 2017.

Be aware that the concepts discussed in this blog are intended to provide only a general overview of year-end tax planning. It is recommended that you review your personal situation with your Adams Brown advisor.

Year-End Tax Planning Moves for Individuals

  • Higher-income earners must be wary of the 3.8 percent surtax on certain unearned income.
  • The 0.9 percent additional Medicare tax also may require higher-income earners to take year-end actions.
  • Realize losses on stocks while substantially preserving your investment position.
  • Postpone income until 2018 and accelerate deductions into 2017 to lower your 2017 tax bill.
  • It may be advantageous to try to arrange with your employer to defer, until early 2018, a bonus that may be coming your way.
  • Consider using a credit card to pay deductible expenses before the end of the year.
  • Increase the amount you set aside for next year in your employer’s health flexible spending account if you set aside too little for this year.
  • Make gifts sheltered by the annual gift tax exclusion before the end of the year and thereby save gift and estate taxes.
  • If you were affected by Hurricane Harvey, Irma, or Maria, keep in mind that you may be entitled to special tax relief under recently passed legislation.

Year-End Tax-Planning Moves for Businesses and Business Owners

  • Consider making expenditures that qualify for the business property expensing option.
  • Consider buying property that qualifies for the 50 percent bonus first-year depreciation if bought and placed in service this year (the bonus percentage increases to 100% for assets purchased after September 27, 2017, and includes used equipment).
  • Businesses contemplating large equipment purchases should keep a close eye on the tax reform plan passed by Congress.
  • If your business was affected by Hurricane Harvey, Irma, or Maria, it may be entitled to an employee retention credit for eligible employees.
  • A corporation should consider deferring income until 2018 if it will be in a higher bracket this year than next.
  • To reduce 2017 taxable income, consider deferring a debt-cancellation event until 2018.

For more year-end tax planning tips, read the full article from Accounting Today here.

As always, we are here to help. Contact your Adams Brown advisor now to finalize your tax planning.