Tax filing day has passed us by for another year (unless you are on extension). Most people don’t start planning for their taxes until they start receiving documents. At this point your accountant is a glorified scorekeeper showing you what you owe or what you are getting back. Now is the time to start planning for 2017, especially with all of the proposed Trump tax cuts.
Time will tell us what is theory and what is the reality when it comes to tax law changes. But we can agree that Trump theoretically wants to reduce taxes. Since the 2017 budget is already set, most likely most tax cuts will be effective starting 1/01/2018. With that in mind, we are utilizing some planning techniques that aim to minimize taxes.
- Defer Income to 2018 if possible. Big bonus coming up? Can it be paid out in January?
- Maximize 2017 pre-tax deductions. 401k, HSA, Dependent Care. Reduce your taxable income from box 1 of your W2.
- Accelerate itemized deductions to 2017. Prepay your January 1 mortgage. Clean out your house for charity (and to avoid being on one of those hoarding shows).
What makes sense for you depends on your individual situation. A good accountant will help you with the planning of your taxes, not just the preparation. If you don’t have a relationship with a professional that helps in the planning of your taxes, it’s time to start looking for a new one now, before those documents arrive in the mail and another year has passed you bye.