We're in that annual holiday lull during which most
of the country takes things real easy, tries to recover from all of the
parties, and gears up for a new beginning.
For your Blue Springs income tax professionals, however ... well, let's just
say that we don't often get a "normal" holiday season, and this year
is even more intense as we process all of the changes coming down the pike for
next year. There was hope by many that this tax reform bill would simplify
things for many taxpayers, but I am sorry to say that is not actually the case.
(I do want to warn you in advance that this email
has a lot of information, and a lot of tax-savings strategies in it. It is a
bit long. But time is short before the end of 2017, and some of these
strategies can save you a bunch of money if you are able to act quickly.)
Back to the tax reform bill ... I saw an article the
other day in a publication for tax accountants, and they referred to the
recently-passed bill as "The Accountants' Full Employment Act".
Yes, there's a lot of talk about how taxes have gone
down for about 80% of the population, and we here at Alliance Financial &
Income Tax, LLC are obviously pleased about that on behalf of our clients.
But "simplified" tax preparation is not
something that was accomplished by this bill, especially for business owners --
but really, for a majority of taxpayers. Yes, the standard deduction is much
higher, and that will make sense for some of our clients to take.
However, as I've alluded to previously, there will
be an entirely different kind of decision matrix for financial decisions. Some
will be simpler, others will be more complex, but regardless, we're on the case
for you.
The IRS has yet to issue actual guidance for tax
professionals on these changes, and there will be many "technical
corrections" still to come (the bill was passed rather quickly), but
again, we DO know some things that will save you some money if you take some
action during this normally-slower week.
I've put together some big ideas that will help. The
last one, in particular, is one that might merit your attention. All of these
are, of course, a personal decision -- and we're here for you regardless.
Shoot me an email or call us ((816) 220-2001) if you
need help.
Mike
Mead's
"Real
World" Personal Strategy Note
2017
Year-End Tax Strategies for Alliance Financial & Income Tax, LLC Clients
With Tax Reform In Mind
"Life
is the art of drawing without an eraser." -John W. Gardner
Year-end can be a snoozer for some taxpayers, and I
don't always "push" very hard on certain things with my clients.
But with a radically different -- but sadly, not
simplified -- tax code for 2018, it would behoove you to sit down and make a
little bit more of an effort ahead of this particular year's end than perhaps
you have in previous years -- so that you can potentially save even more.
None of these require a lot of time or effort, but
they are different than in years past.
Here we go:
1)
Consider donating more aggressively to charity.
The ability to deduct for charitable contributions
isn't going away. But for some taxpayers who end up taking the increased
standard deduction (which nearly doubles, from $6,350 in 2017 to $12,000 in
2018 for singles and $12,700 in 2017 to $24,000 for couples in 2018), giving to
charity NOW will provide a much bigger bang for your buck.
And further (and speaking of bang for your buck),
because of the new, lower rates across most tax brackets, your contributions in
2017 are "worth more" in tax deduction power than they will be in
future years. If your tax bracket falls from 28 percent to 24 percent, for
example, the value of a $100 charitable deduction drops from $28 to $24.
One more idea on this topic: This is a great year
(2017) to give away appreciated stock or securities.
This has two benefits: a deduction for the fair
market value of the security versus getting a deduction for the lower cost
basis in 2018 of up to 30 percent of adjusted gross income (or 20 percent if
contributed to a private foundation); plus the capital gain on the appreciated
security is not taxed.
2)
Consider making an additional mortgage payment.
Again, this is especially true if we think we might
not itemize your deductions for your 2018 tax return. You might not get the
benefit from deducting that interest payment, and so, if you're able to, this
will help your 2017 tax bill and not do anything to help you in 2018 taxes if
you take the standard deduction.
Plus, there is a larger interest deduction in 2017
even if we *do* plan to itemize under the new bill.
One potential pitfall: check with your lender to
make sure this payment goes to interest as well as principal. Sometimes,
additional payments go straight to paying down the principal -- which is a
great practice for saving long term on your mortgage, but which doesn't help
you with your taxes.
3)
Defer income until 2018 begins.
I've written previously about this, so I'll keep it
short: Employees often cannot control the timing of their paycheck, but it
never hurts to ask. Lower marginal rates across the board for 2018 means that
where it's possible to shift income into 2018, do so.
4)
Consider pre-paying or making a deposit towards OUR fees.
Anything that you invest with us for handling all of
your tax preparation needs, unfortunately, is no longer tax deductible in 2018.
But you can pre-pay now and still receive that value for 2017 taxes. Even if
the actual fees for your return end up being different than what you actually pay,
anything you pay in 2017 will be deductible on this year's taxes (even if you
are paying for services you don't receive until 2018 or beyond).
So you get a real-life discount (in terms of tax
deduction opportunities) if you choose to invest in our services before
year-end. Send me an email, if you are interested in this, and we will
follow-up with you as needed. And if for some reason your fees end up being
less than what you pay, we'd be glad to refund you the overage or hold it as a
credit for future services (and in the case of maintaining the credit with us,
you will keep the deduction!).
I hope this helps. Again, this is a bit of a longer
email, especially for the "last-minute tax tips" subject. And there
are potentially other, less common moves that might make sense for certain of
our clients.
Now you understand why our holidays are a little
busier than for some other professionals!
We're in your corner,
Mike
Mead, EA, CTC
Alliance
Financial & Income Tax
807
NW Vesper Street
Blue
Springs, MO. 64015
P
- 816-220-2001 x201
F - 816-220-2012
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