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Year End Tax Planning Moves with the Pending Tax Reform

Ron Odom

December 20, 2017

 

Year-End Tax Planning Moves with the Pending Tax Reform

 

By now, all of you are aware that major tax reform is on the horizon. This is the most comprehensive tax reform since 1986; the legislation is more than 1000 pages. We expect the Tax Cuts and Jobs Act to be passed by both houses of Congress and signed by President Trump by Christmas. This is sweeping tax reform that will affect businesses and individuals in a variety of ways, some positive and some negative.

This new legislation requires a great deal of analysis and we will be discussing appropriate tax planning opportunities with all that are affected during the coming year. Fortunately, there are a few moves that can be made between now and December 31, 2017 that could potentially save you taxes:

1.     Prepay 2018 property taxes. If you are not subject to the alternative minimum tax (AMT) and you can typically itemize your deductions (Schedule A), then you would most likely benefit from paying your 2018 property taxes by 12/31/17. Please be sure to note “prepaid 2018 property tax” in the memo section of your check.

 

2.     Consider accelerating planned charitable donations for next year by making them by 12/31/17. With the standard deduction being doubled, you may not receive any additional benefit by making the contributions next year.

 

3.     If you expect to owe Arizona taxes, make an estimated tax payment by 12/31/17 for the amount you expect to owe (overpaying will not help). However, do not prepay if you expect to be subject to the AMT as this will negate the benefit.  Instead, consider maximizing the Arizona tax credit donations by 12/31/17. This will reduce your AZ taxes and provide a Federal charitable donation that is not affected by the AMT.

 

4.     If you have been considering making a car, boat or RV purchase (not for a business), it may be beneficial to complete the purchase before 12/31/17 due to the potential deductibility of the sales tax paid.

 

5.     If you are moving and will have out-of-pocket moving expenses, if possible complete the move before year-end. These expenses will not be deductible in 2018.

 

6.     If you typically deduct unreimbursed employee business expenses (association dues, books and publications, new computer, etc.), accelerate (prepay if possible) these expenses by paying by 12/31/17. These will not be deductible in 2018 under the pending tax reform.

 

7.     Assuming the law passes, the medical expense limitation will be reduced to 7.5% of AGI for 2017 and 2018, down from 10% currently. If you think you are close to that amount already, to the extent possible pay any medical expenses by 12/31/17. This may not be as beneficial next year with the increased standard deduction.

 

Please be sure to follow AccuPro Advisors on Facebook or our blog at www.accuproadvisors.com as we will be posting information regarding the tax reform and planning opportunities throughout 2018.

As always, if you have any questions about how the above will affect you please email or call our office.

Happy holidays,

AccuPro Advisors

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