Tips for year-end tax planning


There is a lot of planning that goes into the last few months of the year. Planning trips to see family, planning holiday events, planning shopping trips (or nights on Amazon) to get the gifts the kids have been asking for, etc. The to-do list can be long and the last thing anyone really wants to think about right now is tax planning.

However, there are a few simple things to consider before the end of the year to save yourself a few dollars.

Your investments

Before the end of the year, get in touch with your investment advisor. If capital gains are expected, perhaps there are some “loser” stocks that can be sold before year-end to generate losses that can be used to offset the gains. Also, you may be able to take advantage of the zero percent capital gain tax bracket and generate capital gain income that isn’t taxed at the federal level. This is a strategy that works well for stepping up the cost basis on appreciated stock with minimal tax consequences. Talk with your CPA to see if your tax situation allows for this opportunity.


There are various strategies that can be used to accomplish your desire for making charitable contributions. The strong stock market we have seen over the past few months presents an opportunity to donate appreciated stock. You will be able to deduct the fair market value of the stock and avoid paying tax on the gain.

Another powerful giving option to consider is donating a portion of your required minimum distribution (RMD) from your IRA. Instead of claiming your donation as an itemized deduction, donating a portion of your RMD reduces the amount of income that would have otherwise been reported on your tax return. By minimizing gross income, you may be able to avoid net investment income tax, make less of your Social Security income taxable, and avoid increased Medicare premium surcharges.

Finally, take a look through your garage, basement and closets for household items that you no longer use. The deduction for a donation of household goods is equal to the item’s thrift shop value, as long as the items are in good condition or better. Remember to always get a receipt of acknowledgment of your donation to substantiate the deduction.

Defer income and accelerate deductions

The age-old strategy for tax planning is to defer income as long as possible and accelerate deductions into the current year. The time value of money can make this strategy very beneficial. This may be especially worthwhile in 2017. With two tax reform proposals making their way through Congress, it is unknown what 2018 will bring as far as tax law changes. However, it appears likely that many individuals will experience reduced tax rates and some itemized deductions are likely to be eliminated. Consider deferring bonuses, consulting income or self-employment income into next year and accelerating payments that would generate deductions (state and local income tax, property taxes, charitable contributions, etc.) in 2017.

Talk with your tax advisor about running numbers under a few different scenarios. For 2017 planning, it’s especially important to consider the impact of potential changes to the tax law to the extent possible. You also want to be sure you that you have adequate payroll withholdings or have made all required quarterly estimate payments to avoid underpayment penalties.

Spend time planning before the end of the year — it may save you money in the long run!

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