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Key Takeaways from the Tax Cuts and Jobs Act of 2017


Most likely by the time you find yourself reading this, Congress has passed, and the President has signed into law the new sweeping tax plan to take effect January 1, 2018.

Let’s take a few moments to consider the impact this may have on you and what you may contemplate in the remaining days of the 2017 year.

  1. Standard Deduction – The new law designates $12,000 (single) and $24,000 (married) beginning in 2018. This is a significant change, actually a doubling of the amount from 2017). As such, it is estimated that about 30% of those itemizing their deductions in 2017 will be taking the standard deduction going forward. Now – consider this: *The tax overhaul will affect YOU as follows, if you have not had itemized deductions more than the amounts indicated above, over the past few years.
    1. Charitable Donations The standard deduction was increased. Write offs would already be covered by the higher standard deduction beginning in 2018. As such, it is VERY beneficial to accelerate donations that won’t make sense next year. There are additional considerations such as so called donor advised funds, as well as special donations for those over age 70.5.
    2. State and Local Tax PaymentsWhile you cannot prepay your 2018 taxes, you can make generous 2017 estimated tax payments. The new itemized deduction limit beginning next year will be $10,000. So, any estimated payments for 2017 can exceed this amount. One matter to keep in mind is that if you typically pay alternative minimum tax, such prepayment of estimates may provide no benefit (true, a bit confusing – see your accountant).
    3. Medical ExpensesIf you have experienced significant expense during 2017, it would be beneficial, generally to pay in full this expense. The new rate for 2018 is 7.5%. This same rate is also applicable to 2017. So, since your overall tax rate for 2018 will be lower, you may wish to make such payment during the final days of 2017.
  2. Harvest LossesThis procedure is often completed yearly by investors with taxable accounts by selling investments in which the cost of such investment exceeds the current market price. Such losses can then offset taxable gains.
  3. Defer IncomeGenerally always a good idea, but for 2017 especially so since tax rates will be adjusted downward beginning 2018.
  4. Pass-through income This is income that has flowed through (100%) from businesses, such as partnerships, LLC’s, proprietorships and S corporations to your personal tax return. Again, by deferring such income until 2018 will be beneficial in that there will be a 20% deduction (for couples, phasing out at $315,000 income).
  5. Accelerate ExpenseOnce again, this is always a good idea, but particularly during 2017, since tax rates will decline beginning in 2018.

This has been the biggest rewrite to the tax code since the Reagan administration passed the Tax Reform Act of 1986. It is a big change for our nation. If you have any questions or concerns please contact us or your CPA before year-end.

Click here to download our whitepaper for more key takeaways on the Tax Cuts and Jobs Act of 2017.

Harold Gatlin, CPA – Financial Advisor at Scannell Wealth Management

HighTower Advisors do not provide tax or legal advice. This material was not intended or written to be used or presented to any entity as tax advice or tax information. Tax laws vary based on the client’s individual circumstances and can change at any time without notice. Clients are urged to consult their tax or legal advisor before establishing a retirement plan.

Scannell Wealth Management is registered with HighTower Securities, LLC, member FINRA and SIPC, and with HighTower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through HighTower Securities, LLC; advisory services are offered through HighTower Advisors, LLC.

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