Tax Tips 2017!
I hope this note finds you well. As 2017 draws to a close, I wanted to send out some end of year tax tips, along with some articles that may be of interest.
Big changes in store for 2018, with, in the final analysis, some winners and some losers.
For a excellent article on some of the sweeping tax changes that will be in place for 2018, see this article-
2017 YE Tax Planning Tips
1) To deduct your property tax payments on your 2017 taxes, try to pay them in 2017, even though some may not be due until 2018. In addition, the deduction for many State and local taxes is capped at $10,000 for 2018, and the deduction for our personal exemptions is eliminated, so take them in 2017 while you still can!
2) If you cannot make a deductible IRA contribution in 2017, consider a nondeductible IRA and convert to ROTH if you don’t have a separate IRA. Never pay tax on that money again. There is some fine print on this one, so be sure to review it with me first.
3) If your itemized deductions are less than your increased standard deduction will be for 2018, consider making your 2018 charitable giving in 2017.
4) Capital Loss Harvesting. If you have a net capital gain in your investments this year, consider selling some investments that would generate a loss before year end. Doing so could reduce the amount net gains exposed to Capital Gain taxes. Remember, if you sell stock to realize these losses, you’re prohibited from purchasing substantially similar stock, or you risk losing the recognition of the loss under the wash sale rules.
5) The difference between death and taxes is that death doesn’t get worse every time congress meets-Will Rodgers
6) Social Security wage base is raised to $128,400 for 2018. If you have W2 income in excess of this amount, FICA taxes won’t be withheld for amounts earned over the wage base in 2018. As usual there is no cap on the 1.45% medicare tax application.
7) FAST ACT legislation- If you owe over $50,000 to the IRS your passport could be revoked or not issued.
8) Declutter your life by donating household items and clothing to charity and taking the fair value as a deduction for 2016.
9) Make sure you are on your way to maximizing your Retirement Plan contributions to your 401k, IRA or deferred pension plan.
10) Flexible spending accounts, also called flex plans, are fringe benefits which many companies offer that let employees steer part of their pay into a special account which can then be tapped to pay child care or medical bills. The advantage is that money that goes into the account avoids both income and Social Security taxes. The catch is the notorious “use it or lose it” rule. You have to decide at the beginning of the year how much to contribute to the plan and, if you don’t use it all by the end of the year, you forfeit the excess. With year-end approaching, check to see if your employer has adopted a grace period permitted by the IRS, allowing employees to spend 2017 set-aside money as late as March 15, 2018. If not, you can do what employees have always done and make a last-minute trip to the drug store, dentist or optometrist to use up the funds in your account.