Time Sensitive Tax Planning Considerations for 2017

Time Sensitive Tax Planning Considerations for 2017

December 20, 2017

We are not tax advisors: this is for information purposes only and should not be taken as advice. If you would like to learn more, you can find information here or elsewhere online. 

The tax overhaul has been passed, and many changes should be considered prior to year-end.

New Standard Deduction

One major change to consider before the end of the year is the increase in the standard deduction. Effective with 2018 tax filing, the new standard deduction will be nearly doubled both for single filers ($12,000) and for married couples filing jointly ($24,000).

The new standard deduction means it will be much more difficult to get value from itemizing deductions, including charitable donations. However, you can still find ways to make charitable donations and surpass the new standard deduction. “Bunching” donations is a good option to make contributions to your favorite charities every other year – for example, waiting until January 2019 to make a contribution, and then making another contribution at year-end 2019 to achieve deductions above the standard deduction for that year.

The new tax overhaul caps deductions of state and local income or sales and property taxes (SALT) at $10,000 per return. Taxpayers can only pay future taxes that have already been billed. “Tax specialists are also urging many clients to pay the balance due of 2017 state income taxes before Jan. 1 and to consider paying 2018 property taxes that will exceed next year’s limit.”

Defer income until 2018

Many taxpayers will find themselves in a lower tax bracket next year under the new provisions. That creates an incentive to defer income until next year, if possible, when tax rates may be lower. While this isn’t possible for the typical employee receiving a biweekly paycheck, workers who expect year-end bonuses could talk with their employers about delaying payment until 2018. Likewise, contractors can ask clients to delay payment until after January 1, and small business owners can consider pushing their own income payouts into the new year.

Harvesting losses

One provision in the Senate bill that did not pass is the part that would have made it much more difficult to “harvest losses.” This means that one service we can still provide is to choose specific share lots when harvesting capital losses to offset capital gains.

This information and more can be found on the Financial Plans & Strategies blog. Please take a look at the helpful posts and subscribe if you haven’t already done so.


Excerpts in quotes were taken from Laura Saunders’ article titled “Cut Your Tax Bill: What to Do Before Jan. 1” and used with permission from The Wall Street Journal, WSJ.com. Copyright 2017 Dow Jones & Company, Inc. All rights reserved.

Financial Plans & Strategies, Inc Disclosure:

We are not tax advisors: this is for information purposes only and should not be taken as advice.

Advisory Services offered through Financial Plans & Strategies, LLC., aSEC registered investment adviser. For information pertaining to the registration status of FPS, please contact FPS or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov).

No Individual should assume that any information presented or made available on or through this website should be construed as personalized financial planning or investment advice. Personalized financial planning and investment advice can only be rendered after engagement of the firm for services, execution of the required documentation, and receipt of required disclosures. Please contact the firm for further information.

Be sure to consult with a FPS adviser and/or a tax professional before implementing any strategy discussed herein.