The 2017 Tax Cuts and Jobs Act has passed out of Congress and will become effective on 1/1/2018. There are a few things you may be able to do in the remaining days of 2017 to minimize your tax liability considering the changes in the new tax law.
Pay balance of 2017 State Income Tax Payments now*
If you make estimated state income tax payments, you should make your 1/15/2018 payment this month. If you expect to have a 2017 state income liability in excess of your estimated payments, usually because you expect your taxable income to be higher in 2017 than 2016, you should consider paying in an additional sum to your state so that the entire amount of your expected 2017 state tax liability is paid in during this calendar year.
Pay real estate taxes early*
If you have been billed by a municipality for real estate taxes with a payment(s) due in 2018, you should make that payment(s) this month.
Make charitable contributions now
For many taxpayers, the deductibility of charitable contributions will be constrained starting in 2018. If you plan to itemize deductions in 2017, and you are thinking of making near-term charitable contributions, make those now. If you have pledges to charities for payment in 2018 or beyond, you may wish to accelerate your payments to include as much as you can in 2017. Another strategy is to contribute a few years worth of your expected charitable contributions now into a Donor Advised Fund. This allows you to take the deduction in 2017, and payout the charitable gifts in future years. Using appreciated securities to fund a Donor Advised Fund yields even greater tax savings.
Self-Employed – defer income and accelerate expenses
If you are self-employed in a qualifying business, your tax rate may be lower in 2018 than this year. If this is your situation, you should consider deferring income into 2018 and maximizing expenses in 2017.
Everyone’s tax situation is unique to their own circumstances. Some of the above strategies may not be applicable in your individual situation. Before taking any of the above actions, we recommend that you consult with your financial planner or tax advisor for advice that is specific to you.
*If you will be subject to Alternative Minimum Tax (AMT) in 2017, these two strategies do not apply to you.
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Pathway Financial Advisors, LLC-“Pathway”), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Pathway. Please remember that if you are a Pathway client, it remains your responsibility to advise Pathway, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Pathway is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Pathway’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request. Please Note: Pathway does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Pathway’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.