2018 Individual Tax Planning Summary

Published by Heather on

2018 Individual Year End Income Tax Planning

Year end tax planning for the 2018 tax year may be more complex and challenging than in prior years.  The most immediate advice we can provide is…. plan and be prepared.
Below we have compiled a list of items that may help to save or defer taxes if taken into account before the end of 2018:                            

  • A 20% deduction may be available for your rental real estate income under the new tax law.  Beware: significant limitations apply.
  • Determine if there is any opportunity to accelerate or defer income and/or deductions between 2018 and 2019.
  • Consider how limitations on itemized deductions impact you and whether you will benefit from the 2018 increased standard deduction.
  • Charitable contributions of appreciated securities can avoid income tax on the gain from appreciation and their FMV is fully deductible as an itemized deduction (some limits apply).
  • Consider timing recognition of capital losses on the sale of securities before year end to offset current year taxable gains.
  • Conversion of Traditional IRA funds to a Roth IRA in a low tax year may be a good strategy for long term tax-free appreciation on the Roth IRA assets.
  • Initiate your required minimum distribution from retirement accounts before the end of the tax year (if over the age of 70½).  Consider gifting a portion of your RMD directly to a charity, especially if you can no longer itemize.
  • Make any gifts sheltered by the annual gift tax exclusion of $15,000.
  • Keep in mind that tax on unearned income incurred by your minor children may be subject to kiddie tax at the higher trust and estate income tax rates.
  • Possibly defer or reduce income taxes on capital gains by making use of an IRC Section 1031 exchange or an investment in a “qualified opportunity zone” fund.
  • Maximize your use of employer sponsored or self-employed retirement accounts.

Please visit our website for additional details of the above noted items in addition to other potential year end planning opportunities. You should examine any tax planning options thoroughly before initiating action. We are happy to discuss these with you and tailor a tax plan that will work best for you.