Back to top

2017 Year End Tax Planning Ideas - INDIVIDUALS

  • YEAR-END PLANNING 101:  Postpone income until next year and accelerate deductions into this year to lower your tax bill this year. This strategy may enable you to claim larger deductions, credits, and other tax breaks for this year that are phased out over varying levels of adjusted gross income (AGI). These include child tax credits, higher education tax credits, and deductions for student loan interest. Postponing income also is desirable for those taxpayers who anticipate being in a lower tax bracket next year due to changed financial circumstances. Note, however, that in some cases, it may pay to actually accelerate income into this year. For example, this may be the case where a person's marginal tax rate is much lower this year than it will be next year or where lower income in next year will result in a higher tax credit next year for an individual who plans to purchase health insurance on a health exchange and is eligible for a premium assistance credit.
  • TAX LOSS Selling: Realize losses on stock while substantially preserving your investment position. There are several ways this can be done. For example, you can sell the original holding, then buy back the same securities not less than 31 days later. It may be advisable for us to meet to discuss year-end trades you should consider making.
  • ROTH IRA Conversions: If you income is significantly lower this year than it will be in future years, consider converting traditional-IRA into a Roth IRA. Keep in mind, however, that such a conversion will increase your AGI for this year.
  • DEFER YEAR-END BONUSES: It may be advantageous to try to arrange with your employer to defer, until early next year, a bonus that may be coming your way.
  • USE YOUR CC: Consider using a credit card to pay deductible expenses before the end of the year. Doing so will increase your deductions this year even if you don't pay your credit card bill until after the end of the year.
  • PAY STATE TAXES EARLY:  If you believe you will owe state taxes, consider paying them prior to 12/31 to take advantage of the federal tax deduction.  Beware, if your income is too high, this deduction can be limited or eliminated by AMT.
  • BUNCH YOUR DEDUCTIONS: You may be able to save taxes this year and next by applying a bunching strategy to “miscellaneous” itemized deductions, medical expenses and other itemized deductions.  
  • REQUIRED MINIMUM DISTRIBUTIONS(RMD): Take required minimum distributions (RMDs) from your IRA or 401(k) plan (or other employer-sponsored retirement plan). RMDs from IRAs must begin by April 1 of the year following the year you reach age 70-½. That start date also applies to company plans, but non-5% company owners who continue working may defer RMDs until April 1 following the year they retire. Failure to take a required withdrawal can result in a penalty of 50% of the amount of the RMD not withdrawn. Although RMDs must begin no later than April 1 following the year in which the IRA owner attains age 70-½, the first distribution calendar year is the year in which the IRA owner attains age 70-½. Thus, if you turn age 70-½ in 2016, you can delay the first required distribution to 2017, but if you do, you will have to take a double distribution next year—the amount required for this year plus the amount required for next year. Think twice before delaying distributions to next year, as bunching income into a single year might push you into a higher tax bracket or have a detrimental impact on various income tax deductions that are reduced at higher income levels. However, it could be beneficial to take both distributions in 2017 if you will be in a substantially lower bracket that year.  Consider making a charitable contribution directly from your IRA. This counts as your RDM but is not included in your taxable income which can have a beneficial impact on the taxability of your Social Security income.
  • FSA OPEN ENROLLMENT: Increase the amount you set aside for next year in your employer's health flexible spending account (FSA) if you set aside too little for this year.
  • MAX OUT HSA CONTRIBUTION: If you become eligible on or before December of this year to make health savings account (HSA) contributions, you can make a full year's worth of deductible HSA contributions for this year.  
  • BE GREEN:  If you are thinking of installing energy saving improvements to your home, such as certain high-efficiency insulation materials, do so before the close of 2016. You may qualify for a “nonbusiness energy property credit” that won't be available after this year, unless Congress reinstates it.
  • MAKE GIFTS TO FAMILY MEMBERS:  Make gifts sheltered by the annual gift tax exclusion before the end of the year and thereby save gift and/or estate taxes. The exclusion applies to gifts of up to $14,000 made in 2016 and 2017 to each of an unlimited number of individuals. You can't carry over unused exclusions from one year to the next. The transfers also may save family income taxes where income-earning property is given to family members in lower income tax brackets who are not subject to the kiddie tax.


2017 Year end planning for businesses