Tax Memo - Year End Tax Tips! Trump is Coming!

Note From Chris Whalen, CPA: This memo relates to 2016 so it is slightly outdated. Please call me directly to discuss current rates and income tax strategies. 732-673-0510.

2016 is almost over! And what a great year it has been!

I anticipate a Fantastic 2017 for businesses and middle class families.

Here are my top 8 tax tips.

Note: If your current CPA and Financial Adviser are not communicating these important things to you, I highly recommend you call me as soon as possible. 732-673-0510.

1. 2016 tax rates are NOT changing. The current income tax rates of 10, 15, 25, 33, 35 and 39.6 percent are still in effect for the 2016 filing season.

The standard deduction amounts remain the same as well for 2016 that are already in place.

If President Trump gets his way, there will be a dramatic reduction in income taxes for many. Now is the time to plan.

Please call me for a tax planning appointment so we can meet BEFORE December 31 and make tax saving decisions before it’s too late.

2. Postponing Income: Should you move income into 2017? Should you bring expenses into 2016? Under Trump, tax rates next year may be lower, so it might be worth it to employ those strategies. Do you take your bonus in January instead of December?

3. What is your AGI?: Adjust Gross Income plays a significant role in limiting tax benefits: Itemized deductions, personal exemptions, education credits just to name a few. Deferring income into 2017 may also help here.

4. Individual Incentives Made Permanent: The PATH Act of 2015 made a number of tax incentives permanent. For individuals, these include:

The 100 percent gain exclusion on qualified small-business stock.
The American Opportunity Tax Credit;
The exclusion for direct charitable donation of up to $100,000 from an IRA; and,
The teachers’ $250 classroom expense deduction;
The ability to deduct state and local sales tax instead of state income taxes;

5. Business Incentives Made Permanent. The PATH Act of 2015 made a number of tax incentives permanent. For businesses, these include:

15-year straight-line cost recovery for qualified leasehold improvements, restaurant property and retail improvements;
The reduced five year recognition period for S corp built-in gains tax; and,
Charitable deductions for the contribution of food inventory.

6. Retirement Accounts – MAX THEM OUT: If your employer offers matching or they don’t, maxing out contributions to a 401(k) is always a great idea. Even without matching, contributing to 401(ks), IRAs, Keoghs is still a fantastic tax saving device for many.

7. Capital Gain / Loss Timing: I know it’s a Bull Market, but: Taxpayers with large amounts of taxable gains in 2016 may want to offset some of those by realizing losses on those losers in their portfolios to lower their overall capital gains exposure.

8. Mutual Funds – Caution!: Many mutual funds make capital gains distributions in December, so remember that when deciding to buy or sell. Is that fund planning a major distribution? That may add to your tax bill.

Click here to ask me any question you may have.

Please reach out to me without hesitation with any tax, business or accounting question, and to schedule a consultation.

Tax Laws are complex.

It is very easy to make mistakes that can incur penalties.

Do you have a Tax, Accounting or Business Question?

Call Me Immediately. (732) 673-0510.

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