Cassady SchillerBlogYear-end Tax Planning

Year-end Tax Planning



December 15 , 2017 | Posted by Tricia Austing |

Year-end Tax Planning

The holiday season can be a hectic time and for some, the last thing they want to worry about is tax planning.  However, now is the time to discuss tax-saving strategies and opportunities.  Given the pending tax reform, year-end tax planning is more important now than ever!  When it comes to tax planning, each individual situation is different.  Thus, strategies that may benefit one individual, may be detrimental for another.

Charitable Giving.  Charitable giving provides taxpayers with flexibility because you can control the timing of the deduction.  Charitable donations provide more tax savings in a year when you are in a higher tax rate.  Thus, if you expect to be in a higher tax bracket in 2017 than 2018, you might want to consider accelerating some of your charitable giving into 2017.  Another consideration would be to open a donor advised fund, which lets a taxpayer get a deduction now on the money contributed, but allows the flexibility to decide later which charities get the money.

Accelerating Deductions.  Property taxes, along with state and local income taxes, are examples of expenses that you may be able to time in order to take the deduction in the current year.  Be aware that property and state/local income taxes are not deductible for Alternative Minimum Tax (AMT) purposes.  If you are subject to AMT, a prepayment may actually hurt you because you will lose the benefit of the deduction.  It is important to consult your tax advisor because the rules can be complex.

Investment Income.  The tax treatment of your investment income will vary depending on the type of investment, how long you’ve held it and whether any special limitations apply.  For example, holding on to an investment until you’ve owned it more than a year may help reduce the tax associated with any gain.  If you’ve recognized capital gains this year, you may be able to lower your tax liability by selling investments that are worth less now than when you acquired them.  These losses can offset capital gains generated during the year and you can deduct up to $3,000 of the losses and carry forward any excess losses to future tax years.

Gifts.  The 2017 annual gift exclusion is $14,000 and applies to each individual recipient (donee).  Together, a husband and wife may give $28,000 to each donee.  The annual exclusion allows you to give $14,000 to as many people as you wish without it counting against your lifetime exemption.  Gifts made during your lifetime will reduce your taxable estate.  If you have assets that you expect to appreciate, these may be especially advantageous if removed from your taxable estate.  Another important item to note, your annual exclusion does not carry over from one year to the next.  If you don’t use it, you lose it.

Tax planning and deciding which strategies make sense for you is an important decision.  Many factors – past, current and future – should be considered before making any decisions.  Be sure to consult your tax advisor prior to implementing any tax saving strategies.  For more information on the topics mentioned above, along with additional tax planning ideas, you can access our Tax Planning Guide at