Dear Friends and Clients:
This morning, President Trump signed the most sweeping tax legislation since the tax reform act of 1986. While we will be working hard to dissect this new tax legislation over the coming weeks, I wanted to provide you with some “tax stocking stuffers” to start thinking about this over the weekend because there are tax saving opportunities to take advantage of before the end of 2017.
Even though the tax legislation does not come into play until the 2018 tax year, Taxpayers should be mindful that the shift in tax laws from 2017 to 2018 may provide opportunities to lower your taxes in 2017. Specifically, since tax rates will be lower in 2018, it may make sense to recognize income in 2018 rather than 2017 if you can defer income to 2018 (or simply not over-recognize income in 2017). Some straightforward strategies that you should consider that may lead to lower income in 2017 and 2018 include:
- Defer billings (or the recognition of income) until 2018
- Accelerate expenses in 2017
- Write off uncollectable receivables and other assets that are on the balance sheet, but no longer have value
- Accrue liabilities for known 2017 expenses that have not been placed on the balance sheet, including claims against your company
- Purchase fixed assets to take advantage of the Section 179 deduction
- Make a contribution to a company profit-sharing plan
- Harvest capital losses to offset capital gains during a period of higher tax rates.
Also, since many taxpayers will lose their property tax deduction and state tax deductions in 2018, taxpayers should consider paying their estimated 2017 state taxes and first installment of their 2018 property taxes before the end of the year.
CNN has an article: “34 Things You Need to Know About the Incoming Tax Law”. This article includes a great summary of the changes and I suggest you read it. A link to this article follows:
We are excited about this new tax legislation because it still provides ample opportunities for employing strategies to reduce taxes. If you’d like to schedule an appointment to discuss the tax reform and your particular situation, please do not hesitate to contact me.
We wish you wonderful end to 2017 and a healthy and prosperous 2018.
Adam Minow
MinowCPA Corporation