The best year-end tax planning strategy for many taxpayers will be to follow the time-honored approach of deferring income and accelerating deductions to minimize 2017 taxes. This approach may turn out to be even more valuable if Congress succeeds in enacting tax reform that reduces tax rates beginning next year in exchange for slimmed-down deductions. Regardless of whether tax reform is enacted, deferring income also may help you minimize or avoid AGI-based phase-outs of various tax breaks that apply for 2017. As always, tax planning does not occur in a vacuum. It must take into account each taxpayer’s particular situation and planning goals with the aim of minimizing taxes to the greatest extent possible.
Valuable year-end planning moves for your business includes expensing assets by taking advantage of Code Section 179 and the 50% first year bonus depreciation. You should take advantage of stock losses to offset any gains on sales in your portfolio. You should take year-end plans to minimize the 3.8% surtax on net investment income. If your income is lower, you should consider converting some of your traditional IRA funds to a ROTH IRA. If you have a required minimum distribution, consider making a direct contribution to the charity of your choice to avoid the income. Disposing of passive activities may free-up suspended losses and offset other income.
There are several ways we can help with year-end planning and it is best to take advantage of it now rather than wait until after year-end when it may be too late.