Call (239) 658-5217 today to learn how we may serve you

As the end of the year 2017 approaches, it’s a perfect time to start considering of tax planning moves that will help lower your tax bill. Rather than wait until the end of December, when most people would rather be on a trip or enjoying the holiday festivities, it is best to get a head start on year-end planning to improve your chances of concluding matters by Dec. 31.

While there is much vagueness about what shape tax reform may take next year and beyond, taxpayers can use several year-end planning strategies to maximize their tax benefits for 2017.

For Individuals

  • Minimize the impact of the 3.8% surtax on net investment income. The Medicare surtax of 3.8% applies to the net investment income of taxpayers who have adjusted gross income over certain thresholds ($200,000 for a single filer; $250,000 for married filers). As year-end nears, taxpayers should consider ways to minimize the 3.8% surtax by reducing their Modified Adjusted Gross Income, their Net Investment Income, or both.
  • Harvest tax-deductible losses to offset taxable gains for 2017.
  • Defer income until 2018 and accelerate deductions into 2017 to lower your 2017 tax bill. Doing so will enable you to claim larger deductions, credits, and other tax breaks for 2017 that are phased out over varying levels of adjusted gross income.
  • Consider Roth IRA Conversion. Roth IRA allows a taxpayer to take advantage of lower brackets or absorb excess tax deductions.
  • Defer compensation. Ask your employer to defer, until early 2018, any bonuses that you may receive this 2017.
  • Take advantage of the annual gift tax exclusion. An annual exclusion gift is one that qualifies for the $14,000 per person per year exclusion from federal gift taxes as of 2016. You can give away this much in cash or property value without incurring a gift tax.

For Businesses

  • Take advantage of R&D tax credit and AMT. Beginning in 2016, eligible small businesses ($50 million or less in gross receipts) may claim the research and development (R&D) tax credit against an alternative minimum tax (AMT) liability. A business that would be eligible for this would be a partnership, sole proprietorship, or a non-publicly traded company. One more requirement is that a business’s annual gross receipts from the previous 3-year period cannot exceed $50,000,000.
  • Set-up a qualified retirement plan. There are several different types of qualified retirement plans that self-employed individuals and closely held companies can utilize to defer income taxes. In some cases, you can defer significant tax liability. Also, they don’t have to be funded until the due date of the tax return plus extensions; however, they must be established by year-end.
  • Review accounting methods. Doing so will help you determine if you are using the most effective methodologies to maximize tax deductions.
  • See if you can qualify for “de minimis safe harbor election”. Businesses, especially those who operate in the real estate industry, can take advantage of the de minimis safe harbor election to disburse the costs of lower-cost assets and materials and supplies, assuming the costs don’t have to be capitalized under the Code Section 263A uniform capitalization (UNICAP) rules.

These are just a few tips that we suggest you consider before the end of 2017 to enable you to start 2018 in the best financial shape possible. If you are interested in tax planning now, please give us a call at (615) 678-4751. Please note, our fees are based upon projected results and if you don’t like the general plan, we will refund your money.