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Tax Planning & Financial Planning – Time is Now

Tax PlanningAs we approach the end of the year, so much is happening in our financial world. We have proposed tax legislation which, if passed, can impact decisions for 2017 as well as 2018. The question is “if it passes”. I have heard from a number of clients asking about the impact of the proposed legislation. The problem is that if a law is passed it will not look like the proposed legislation so it is difficult to plan around this situation. This is why taxpayer’s need to consult with a tax professional who’s practice emphasizes formal tax planning. Because of the current economic, political and legislative climate, there has rarely been a more critical time to engage in tax planning and financial planning services, and the sooner the better.

At Joseph F. Fragnoli, CPA, PC in Nashville, TN, our Firm focuses on formal tax planning. We also intertwine the tax planning process with financial planning. People should remember, that the primary purpose of formal tax planning is to help the taxpayer keep as much money earned from their business, employment and investments as possible and to pay as little tax as possible so they have more to invest and use to achieve financial goals. Financial planning without tax planning and tax planning without financial planning objective considerations is incomplete planning altogether!

Here are two simple examples of some tax strategies, based on the proposed legislation, for middle income taxpayers to consider:

  1. With the doubling of the standard deduction, while you may itemize under the current law you, may not have enough deductions to itemize in 2018. Accordingly, you will want to accelerate as many itemized deductions into 2017 as possible. If you are in Tennessee, buy that car you are thinking about acquiring in January, in December for the sales tax deduction. If cash flow permits, pay up any charitable contribution commitments for 2018 into 2017. If you are in California, pay that April property tax payment in December. After all, there is consideration of the elimination of state and local taxes as a deduction.
  2. With the reduction of tax rates for middle income taxpayers, if you are self-employed or own your company and file on a cash basis, defer as much income into 2018 as you can. Also, prepay or pay up as many bills for services and supplies in 2017 as you can. For example, I will buy all of the projected office supplies my office will need for 2018 in December 2017.

Many of the more sophisticated tax strategies will apply equally to the current law as with the proposed legislation. In particular, the retirement plan considerations and strategies.

The tax proposal may impact your financial plan. As we approach year end, it is always a good time for a review of your current financial plan or to establish a financial plan and in the process look at the impact of the proposed legislation on your plan. You may be taking more money home in your paycheck in 2018, if the law passes. That means, as examples, you have more money to contribute to your 401(K) plan or IRA or SEP IRA, more money to pay off debt or more money to fund the kids college accounts. Your plan will need to be updated so you can stay on target to meet your financial objectives or to change the objectives as a result of more retained income.

There is a lot to absorb when it comes to tax planning and financial planning and I cannot stress enough that you should seek out a professional who understands both. We at Joseph F. Fragnoli, CPA, PC would love the opportunity to discuss these services with you and show you how we may differentiate ourselves from other services providers. Please fee free to contact us at (615) 678-4751 or e-mail us at