We’re in that annual holiday lull during which most of the country takes things real easy, tries to recover from all of the parties, and gears up for a new beginning.

For tax professionals, however … well, let’s just say that we don’t often get a “normal” holiday season, and this year is even more intense as we process all of the changes coming down the pike for next year. There was hope by many that this tax reform bill would simplify things for many taxpayers in Louisville, but I am sorry to say that is not actually the case.

(I do want to warn you in advance that this note has a lot of information, and a lot of tax-savings strategies in it. It is a bit long. But time is short before the end of 2017, and some of these strategies can save you a bunch of money if you are able to act quickly.)

Back to the tax reform bill … I saw an article the other day in a publication for tax accountants, and they referred to the recently-passed bill as “The Accountants’ Full Employment Act”.

Yes, there’s a lot of talk about how taxes have gone down for about 80% of the population, and we here at Roberts CPA Group are obviously pleased about that on behalf of our Louisville clients.

But “simplified” tax preparation is not something that was accomplished by this bill, especially for business owners — but really, for a majority of Louisville taxpayers. Yes, the standard deduction is much higher, and that will make sense for some of our clients to take.

However, as I’ve alluded to previously, there will be an entirely different kind of decision matrix for financial decisions. Some will be simpler, others will be more complex, but regardless, we’re on the case for you.

The IRS has yet to issue actual guidance for tax professionals on these changes, and there will be many “technical corrections” still to come (the bill was passed rather quickly), but again, we DO know some things that will save you some money if you take some action during this normally-slower week.

I’ve put together some big ideas that will help. The last one, in particular, is one that might merit your attention. All of these are, of course, a personal decision — and we’re here for you regardless.

Shoot me an email by using the link at the top of the page or call us ((502) 426-0000) if you need help.

4 Key Year-End Tax Strategies With Tax Reform In Mind For Louisville Taxpayers
“Life is the art of drawing without an eraser.” -John W. Gardner

Year-end can be a snoozer for some Louisville taxpayers, and I don’t always “push” very hard on certain things with my clients.

But with a radically different — but sadly, not simplified — tax code for 2018, it would behoove you to sit down and make a little bit more of an effort ahead of this particular year’s end than perhaps you have in previous years — so that you can potentially save even more.

None of these tax strategies require a lot of time or effort, but they are different than in years past.

Here we go:

1) Consider donating more aggressively to charity. 
The ability to deduct for charitable contributions isn’t going away. But for some taxpayers who end up taking the increased standard deduction (which nearly doubles, from $6,350 in 2017 to $12,000 in 2018 for singles and $12,700 in 2017 to $24,000 for couples in 2018), giving to charity NOW will provide a much bigger bang for your buck.

And further (and speaking of bang for your buck), because of the new, lower rates across most tax brackets, your contributions in 2017 are “worth more” in tax deduction power than they will be in future years. If your tax bracket falls from 28 percent to 24 percent, for example, the value of a $100 charitable deduction drops from $28 to $24.

One more idea on this topic: This is a great year (2017) to give away appreciated stock or securities.
This has two benefits: a deduction for the fair market value of the security versus getting a deduction for the lower cost basis in 2018 of up to 30 percent of adjusted gross income (or 20 percent if contributed to a private foundation); plus the capital gain on the appreciated security is not taxed.

2) Consider making an additional mortgage payment. 
Again, this is especially true if we think we might not itemize your deductions for your 2018 tax return. You might not get the benefit from deducting that interest payment, and so, if you’re able to, this will help your 2017 tax bill and not do anything to help you in 2018 taxes if you take the standard deduction.

Plus, there is a larger interest deduction in 2017 even if we *do* plan to itemize under the new bill.

One potential pitfall: check with your lender to make sure this payment goes to interest as well as principal. Sometimes, additional payments go straight to paying down the principal — which is a great practice for saving long term on your mortgage, but which doesn’t help you with your taxes.

3) Defer income until 2018 begins. 
I’ve written previously about this, so I’ll keep it short: Employees often cannot control the timing of their paycheck, but it never hurts to ask. Lower marginal rates across the board for 2018 means that where it’s possible to shift income into 2018, do so.

4) Consider pre-paying or making a deposit towards OUR fees. Anything that you invest with us for handling all of your tax preparation needs, unfortunately, is no longer tax deductible in 2018. But you can pre-pay now and still receive that value for 2017 taxes. Even if the actual fees for your return end up being different than what you actually pay, anything you pay in 2017 will be deductible on this year’s taxes (even if you are paying for services you don’t receive until 2018 or beyond).

So you get a real-life discount (in terms of tax deduction opportunities) if you choose to invest in our services before year-end. Send me an email through the link at the top of the page, if you are interested in this, and we will follow-up with you as needed. And if for some reason your fees end up being less than what you pay, we’d be glad to refund you the overage or hold it as a credit for future services (and in the case of maintaining the credit with us, you will keep the deduction!).

I hope this helps. Again, this is a bit of a longer note, especially for the “last-minute tax tips” subject. And there are potentially other, less common moves that might make sense for certain of our Louisville clients.

Now you understand why our holidays are a little busier than for some other professionals!

We’re in your corner,

Kevin Roberts
(502) 426-0000

Roberts CPA Group