Fortis Perspectives – November 2017




Year-End Tax Planning In the Wake of Tax Reform.

Jennifer-Fields_bwAs you have undoubtedly seen in the news, the U.S. House and Senate have each released their respective versions of the Tax Cuts and Jobs Act over the last few weeks. The House bill presented many challenges for year-end planning and now this is compounded by the Senate’s proposal, which varies from current law and the House proposal. What should taxpayers contemplate as we approach December 31st? Consider the issue below. As always, we are here to help you navigate the every-changing tax landscape.  Reform may bring lower tax rates and greater limitations on deductions. Consider accelerating deductions and deferring income.

  • Consider paying state, local and real estate taxes before year-end.
  • Proposed changes to the mortgage interest deduction are on the table. Before paying off, refinancing or consolidating debt speak to your tax advisor to determine how you may be impacted.
  • Although charitable gifts continue to be a deduction under the proposed bills, taking the deduction in 2017 against higher tax rates may be applicable to you.
  • Itemized deductions are expected to be limited so consider prepaying tax preparations fees and investment advisory fees.
  • Other standard year-end practices still apply including the following: utilizing payroll or RMD withholding in lieu of quarterly estimates, realizing losses on investments, donating appreciated stock, making qualified charitable distributions from an IRA, maximizing 2017 retirement contributions and year-end gifting.
  • Both bills contemplate an expanded gift / estate tax exemption. Although we do not foresee any year- end deadlines, many families will want to take advantage of this immediately following the New Year, should a bill be passed.
  • For business owners, modifications to corporate tax rates as well as pass-through entities will certainly call into question the optimal entity structure. We recommend consulting with your advisor immediately to consider all options.
  • Other corporate matters like expensing the cost of qualified property, depreciation and deductibility of interest may change so this warrants most business owners to revisit their current tax plans.

In summary, the proposed bills impact individuals, corporations, pass-through entities and exempt organizations. We expect these bills to be modified as politics will inevitably interfere with real tax reform. Our clients will hear from us in the coming weeks as we prepare for year-end and 2018 planning opportunities. In the meantime, if there are immediate needs or concerns please do not hesitate to contact us to discuss the potential impact on you and your family.

Fortis Perspectives                                                                                November 2017

Jennifer L. Fields
Director of Tax

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