Fall is the perfect time to start tax planning for 2017. By taking the time now to meet
with your tax advisor, you can proactively access your taxes, and can take advantage
of tax provisions, deductibles and credits to reduce your tax liability. The goal of tax
planning is to reduce taxes, and have more control of your assets and investments.
Here are a few quick tips to get you started.
Review Your Retirement Plan
Consider maxing out your 401k contributions in 2017. You can defer up to $18,000 of
income by contributing this amount to your 401k. For taxpayers, 50 years or older,
this amount increases to $24,000. Anticipating a year-end bonus? Consider adding
some to your 401K! If you don’t have an employer sponsored 401k, there are other
options for you to save money into your retirement nest egg. Talk to your tax
Donate Appreciated Property
Consider donating appreciated property, such as stock. You could receive a
charitable deduction for the value of the stock, avoid recognizing the appreciation
for income tax purposes, and net investment income for tax purposes. A friendly
reminder, net investment income (NII) tax is the additional 3.8% tax that applies to
certain net investment income of individuals who have income above a threshold
amount. Net investment income includes, but is not limited to, interest, dividends,
capital gains, and passive income. The NII income threshold for 2017 is $200,000 for
singles and $250,000 for taxpayers who are married, filing jointly.
Defer Income Into the Future
If you anticipate having a significant decrease in income in 2018, it may make sense
to try to defer income into next year or later years, such as sale of assets or
consider an installment sale. Also, talk of simplification of the Internal Revenue
Code is getting serious in Washington DC, so you may want to consider accelerating
any itemized deductions in 2017.
Written by Kevin McQuillan. Mr. McQuillan is a Certified Public Accountant, and
Co-Founder of The McQuillan Group. A boutique accounting firm in PittsburghPa.