When December and the holiday season rolls around it’s very easy to get caught up in all the holiday preparation. The last thing you want to think about is year-end tax planning but it might save you big money come April if you can sit down and review your 2017 tax situation and look ahead a little to 2018. This year might be a little more complex to do tax planning as the tax laws will likely be changing but we don’t know for sure what they will look like in 2018.
A few tax planning strategies that never seem to change:
- Review your investments and balance capital gains by potentially selling investments at a loss
- Review your wage withholdings–to high, too low?
- Consider contributing the max to your retirement fund (SEP, traditional, & IRA contributions for 2017 can be made up until filing deadline 2018)
- Spend money in flexible spending accounts that don’t rollover
- Make those last minute charitable donations (cash or non-cash) and save receipts!
In light of the tax law changing, the biggest thing that will impact many of my tax clients is the doubling of the standard deduction. If you don’t think you will hit the $24,000 (ish) itemized deduction floor in 2018, accelerating some deductions before December 31,2017 may give you the best of both world. Look at your cash flow and consider accelerating the following:
- Charitable contributions–if you normally give monthly make the January payment in December
- Mortgage Interest–pay your January mortgage bill in December
- State taxes–if you pay quarterly estimated taxes, don’t wait until January 15 to pay the state portion. Send the check by December 31 to take the deduction in 2017 as this itemized deduction is slated to be chopped entirely in 2018.
- Have a lot of unreimbursed employee expenses or other miscellaneous itemized deductions? Bunch them before year end
Happy Holidays and Happy Tax Planning!