Don’t Feel Taxed this Holiday Season

Melissa Olszak, CFP®, CFA® BY: Melissa Olszak, CFP®, CFA® 11.06.17

4 Financial Planning Opportunities to Consider Before 2018

As we roll back the clocks and look forward to the holiday season, it’s important to give some thought to year-end financial planning to be sure that any opportunities that expire at year-end are addressed in time to execute them before toasting the New Year.

Here are 4 financial planning items to consider as we approach 2018:


  1. Year-End Giving

You may be considering giving financially, either to a charitable cause or to family and friends. Monetary giving is always a great way to give back or make an impact; however, each method of giving carries different considerations.

If you’re considering giving appreciated securities instead of cash, keep in mind they should be long-term to get the deduction at fair market value rather than at cost.

It may not make sense to make the donation in 2017 if you have already hit the adjusted gross income (AGI) limit for donations and have carryovers from prior years that should be used.

It may also not make sense to make the donation in 2017 if you expect to be in a higher tax bracket next year, as waiting a year may provide you with a larger deduction.


  1. Deductions

Outside of any deductions for charitable giving, there are other deductions you should consider taking before year-end, rather than in the New Year. These include expenses you can take as itemized deductions, such as:

When making the decision to take deductions, it’s important to understand whether you expect to be in a lower tax bracket this year or next, and whether you will be subject to the alternative minimum tax (AMT). If you will be subject to the AMT, you may not get the benefit of the deduction. Therefore, frontloading it won’t help.

The tax system and phase-outs on deductions is complex, and if you’re unsure how deductions can work for you, it may make sense to have your accountant run a current-year projection with (and without) certain deductions. This projection will also help catch any expiring carryforwards about which you may not have been aware.


  1. Investment items

Before the end of the year, it’s a good idea to review your investments to see what opportunities exist. A few to keep in mind are the following:

If you’re unsure whether the securities you are considering are different enough, you should consult with your accountant.

Similarly, if you are planning to purchase, it may be beneficial to purchase after the ex-dividend date to avoid possibly being taxed at ordinary rates on an immediate distribution.


  1. Required Distributions

There are a handful of entities that have required minimum distributions (RMDs), and typically the RMD is measured on a tax year. Here are a few examples you’ll want to consider:

Since many of the above items have several steps involved for execution after a decision is made, it is best to start early. Hopefully by starting early, you’ll be able to enjoy the holiday season and not be feeling taxed by the chase for final deductions, write-offs or other requirements in the final week of the year!

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