2017 Year End Tax Planning Checklist for Individuals | Pine & Co. CPAs
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2017 Year-End Tax Planning Checklist for Individuals

By December 18, 2017 Taxes, Accounting

As the end of the year approaches, it’s time to take a look at some year end tax planning strategies for this year, and possibly the next. Last month, we discussed some possible tax deductions and credits for businesses, but individuals should be preparing for filing time, too.

We have compiled a checklist of possible strategies based on current tax rules that may help you save tax dollars if you act before year-end. Not all of these items will apply in your particular situation, but you (or a family member) will likely benefit from many of them. We can narrow down the specific actions that you can take once we meet with you to tailor a particular plan.

Additionally, with the recent Tax Reform legislation all but guaranteed to pass now, and with an effective date of new lower tax rates effective as of January 1st, 2018, the best strategy any taxpayer can take is to defer income from this year to 2018 and accelerate all available expenses into this current year. By doing so, you will be paying an overall less effective tax rate on the same earnings you will already be reporting.

In the meantime, take a look at the following list and contact us at as soon as possible so we can advise you on which tax-saving moves to make.

Please note that this discussion applies to the tax laws currently in effect, and could possibly change with any new tax legislation that may be passed into law.

Realize losses on stock while still substantially preserving your investment position.

There are several ways this can be done. For example, you can sell the original holding, then buy back the same securities at least 31 days later. It is advisable for us to meet to discuss year-end trades you should consider making.


Use a credit card to pay off deductible expenses.

Consider using a credit card to pay deductible expenses before the end of the year. Doing so will increase your 2017 deductions even if you don’t pay your credit card bill until after the end of the year.

Another deductible expense strategy that may apply to you is paying contested taxes in order to deduct them this year while continuing to contest them next year.


Implement a “bunching” strategy.

You may be able to save taxes by applying a bunching strategy to pull “miscellaneous” itemized deductions, medical expenses and other itemized deductions into this year. This is another beneficial strategy in the case that Congress eliminates such deductions beginning in 2018.


Take advantage of natural disaster-related tax relief options.

If you were affected by Hurricane Harvey, Irma, or Maria, keep in mind that you may be entitled to special tax relief under the recently passed legislation, such as relaxed casualty loss rules and eased access to your retirement funds. In addition, qualifying charitable contributions related to relief efforts in the Hurricane Harvey, Irma, or Maria disaster areas aren’t subject to the usual charitable deduction limitations.

Settle insurance or damage claims before the end of the year, if possible, in order to maximize your casualty loss deduction this year.


Consider converting traditional IRA money invested in beaten-down stock into a Roth IRA.

If you believe a Roth IRA is better than a traditional IRA, you can convert traditional-IRA money invested in beaten-down stock (or mutual funds) into a Roth IRA if eligible to do so. Keep in mind, however, that such a conversion will increase your AGI for 2017.

If you converted assets in a traditional IRA to a Roth IRA earlier in the year and the assets in the Roth IRA account declined in value, you could wind up paying a higher tax than is necessary if you leave things as is. You can back out of the transaction by transferring the converted amount (plus earnings, or minus losses) from the Roth IRA back to a traditional IRA via a trustee-to-trustee transfer. You can later reconvert to a Roth IRA. If this sounds confusing, as always, give us a call.


Postpone your income until 2018 and accelerate your deductions into 2017 to lower your 2017 tax bill.

This is one strategy that may be especially important to take advantage of in case Congress succeeds in lowering next year’s tax rates in exchange for slimmed-down deductions.

Even if Congress isn’t successful in implementing that component of their planned tax reform, this strategy could still help you claim larger deductions, credits, and other tax breaks for 2017 that are phased out over varying levels of adjusted gross income (AGI). These tax breaks include:

  • child tax credits
  • higher education tax credits
  • deductions for student loan interest

Postponing income is also a good idea if you anticipate being in a lower tax bracket next year due to changed financial circumstances. Note, however, that in some cases, it may pay to actually accelerate income into 2017. This is yet another reason it’s important to meet with us.


Defer your bonus to 2018.

Speaking of postponing your income, it may be advantageous to try to arrange with your employer to defer a bonus that may be coming your way until early 2018. This could cut as well as defer your tax if Congress reduces tax rates in the beginning of the new year.


Ask your employer to increase withholding of state and local taxes.

If you expect to owe state and local income taxes when you file your return next year, consider asking your employer to increase withholding of state and local taxes (or pay estimated tax payments of state and local taxes) before year-end. This will pull the deduction of those taxes into 2017 if you won’t be subject to alternative minimum tax (AMT) in 2017. Pulling state and local tax deductions into 2017 would be especially beneficial if Congress eliminates such deductions beginning next year.


If you’re a higher-income earner, meet with your tax planning professional to discuss ways to manage the 3.8% surtax on certain unearned income.

The surtax is 3.8% of the lesser of: (1) net investment income (NII), or (2) the excess of modified adjusted gross income (MAGI) over a threshold amount of:

  • $250,000 for joint filers or surviving spouses, or
  • $125,000 for a married individual filing a separate return, or
  • $200,000 in any other case

As year-end nears, your strategy for minimizing or eliminating the 3.8% surtax will depend on your estimated MAGI and NII for the year. It’s wise to consult your tax planning professional in order to make sure you take the right steps, should you choose to take this approach.


Higher-income earners should also meet with their tax planners in order to properly manage the 0.9% additional Medicare tax.

The additional Medicare tax applies to individuals whose income is over:

  • $250,000 for joint filers, or
  • $125,000 for married couples filing separately, or
  • $200,000 in any other case

This tax must be withheld by employers regardless of filing status or any other income, and self-employed people must take it into account when figuring their estimated tax. However, there are certain circumstances in which an employee would need to have more withheld in order to cover the tax, and this is where the waters can become muddied. For that reason, it’s important to review the best management strategy for your individual circumstances with your tax professional.


Take an eligible rollover distribution from a qualified retirement plan.

This would be a beneficial action to take before the end of 2017 if you are facing a penalty for underpayment of estimated tax and having your employer increase your withholding is unavailable or won’t sufficiently address the problem.

Income tax will be withheld from the distribution and will be applied toward the taxes owed for 2017. You can then timely roll over the gross amount of the distribution, i.e., the net amount you received plus the amount of withheld tax, to a traditional IRA. No part of the distribution will be includible in income for 2017, but the withheld tax will be applied pro rata over the full 2017 tax year to reduce previous underpayments of estimated tax.


Estimate the effect of any year-end planning moves on the AMT for 2017.

If you pursue this strategy, keep in mind that many tax breaks allowed for purposes of calculating regular taxes are disallowed for AMT purposes. These include:

  • the deduction for state property taxes on your residence
  • state income taxes
  • miscellaneous itemized deductions
  • personal exemption deductions

If you are subject to the AMT for 2017 or suspect you might be, these types of deductions should not be accelerated. Of course, if you’re not sure, be sure to meet with us.


Save on gift and exchange taxes.

Make gifts sheltered by the annual gift tax exclusion before the end of the year and thereby save gift and estate taxes. The exclusion applies to gifts of up to $14,000 made in 2017 to each of an unlimited number of individuals.

You can’t carry over unused exclusions from one year to the next. Such transfers may save family income taxes where an income-earning property is given to family members in lower income tax brackets who are not subject to the kiddie tax.


Take required minimum distributions (RMDs) from your IRA or 401(k) plan (or other employer-sponsored retirement plans).

RMDs from IRAs must begin by April 1 of the year following the year you reach 70 1⁄2. That start date also applies to company plans, but non-5% company owners who continue working may defer RMDs until April 1 following the year they retire.

Failure to take a required withdrawal can result in a penalty of 50% of the amount of the RMD not withdrawn. Although RMDs must begin no later than April 1 following the year in which the IRA owner attains age 70 1⁄2, the first distribution calendar year is the year in which the IRA owner attains age 70 1⁄2.

So, if you turn age 70 1⁄2 in 2017, you can delay the first required distribution to 2018, but if you do, you will have to take a double distribution in 2018: the amount required for 2017 plus the amount required for 2018.

Think twice before delaying 2017 distributions to 2018, as bunching income into 2018 might push you into a higher tax bracket or have a detrimental impact on various income tax deductions that are reduced at higher income levels. However, it could be beneficial to take both distributions in 2018 if you will be in a substantially lower tax bracket in 2018.

With that said, the complexity of such cases is yet another reminder to always consult a tax professional before making any moves that will affect your tax bill.


Looking for a tax planning professional in the Dallas-Fort Worth area?

We at Pine & Company CPAs pride ourselves in offering our clients comprehensive business consulting services. Be sure to contact us to schedule a meeting so we can identify the best tax credit and deduction strategies for you.

Own a business? You can learn more about our business consulting services here. You can also learn more about our comprehensive tax planning services here.

The above advice (‘this message”) is not intended to constitute written tax advice within the meaning of IRS Circular 230 §10.37. Therefore, the intent of this message is to communicate general information for discussion purposes only, and you should not, therefore, interpret the statements to be written tax advice or rely on the statements for any purpose.