Tax Strategies to Consider by Year End

It is said that the only things certain in life are death and taxes. Unless, of course, you are talking about the sweeping tax reform legislation set to become law this week. It’s been over thirty years since the last major tax reform. With such significant changes taking effect in just a few short weeks, it may be valuable to consider several last-minute tax moves before you flip the calendar to 2018.

Since everyone’s situation is unique, be certain to consult with your tax professional before making any moves. That being said, here are some things to consider for your discussion:

• State and Local Income Taxes. Starting next year, state and local income and property taxes will be deductible up to a combined $10,000 cap. If you expect to hit this limit next year and are not subject to AMT, it may be worth paying any remaining 2017 state tax liability, including Q4 estimated taxes, by the end of this year. The same is true if you have reason to believe your tax rate may be lower next year.
• Property Taxes. While you cannot pre-pay 2018 income taxes, you may be able to catch an extra break by paying some of your 2018 property tax bill this year. Again, the benefit of this strategy is dependent on if you expect to exceed the combined $10,000 state and local tax deduction cap and whether your tax rate is expected to decrease (not to mention AMT exposure) in 2018.
• Charitable Contributions. The tax overhaul nearly doubles the standard deduction, which creates a larger hurdle for claiming itemized deductions like charitable contributions. As a result, some taxpayers who currently itemize are likely to switch to the standard deduction next year and won’t receive a tax benefit for their charitable giving. In that case, it may be advantageous to maximize contributions this year. On the other end of the spectrum, those taxpayers who make substantial contributions may be better off waiting for the 50% AGI limitation to be expanded to 60% in 2018.
• Alternative Minimum Tax. The Alternative Minimum Tax (AMT) system is changing dramatically in 2018. If the AMT applies to you for the 2017 tax year, it is possible that deductions such as state, local and property taxes may be less valuable than they will be in 2018. Talk with your tax professional to see what strategy makes sense given your specific situation.

Once again, it is important to stress that individual needs and financial goals are highly singular. Make an appointment with your tax preparer or advisor before the new year arrives to make certain that any strategy or tax moves are genuinely in your best interests.

The new tax rules will bring a plethora of planning opportunities in the new year and we look forward to discussing these with you. Enjoy the holidays and have a happy New Year!

Disclosures:

The information provided is for general educational purposes only and is not intended to be, and should not be construed as legal or tax advice. The information is subject to change and, although based upon information that AdvicePeriod considers reliable, is not guaranteed as to its accuracy or completeness. AdvicePeriod makes no warranties with regard to the information or results obtained by its use and disclaims any liability arising out of your use of, or reliance on, the information.
Any tax discussions contained in this communication was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matter addressed herein.

AdvicePeriod, LLC (“AdvicePeriod”) is an SEC registered investment adviser with its principal place of business in the State of California. Any reference to the terms “registered investment adviser” or “registered,” do not imply that AdvicePeriod or any person associated with AdvicePeriod has achieved a certain level of skill or training. AdvicePeriod and its representatives are in compliance with the current registration and notice filing requirements imposed upon registered investment advisers by those states in which AdvicePeriod maintains clients. AdvicePeriod may only transact business in those states in which it is notice filed, or qualifies for an exemption or exclusion from registration/notice filing requirements. This article is limited to the dissemination of general information pertaining to its investment advisory services. Any subsequent, direct communication by AdvicePeriod with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of AdvicePeriod, please contact AdvicePeriod or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov).

For additional information about AdvicePeriod, including fees and services, send for our disclosure statement as set forth on Form ADV from AdvicePeriod using the contact information herein. Please read the disclosure statement carefully before you invest or send money.