Ullmann & Company, PC
2017 Year-End IndividualTax Planning Moves

As year-end approaches, it is a good time to think of planning moves that may help lower your tax bill this year.

We have compiled a list of items that may be helpful if taken into account before the end of 2017. Of course, not all alternatives will apply to your particular situation; therefore, we ask that you please review the following list and contact us to discuss the benefit and/or your eligibility before taking any action.Year-end planning is a bigger challenge this year than in past years.

Major tax reform proposals are being debated by our legislators. Although it is unlikely that tax reform will affect the 2017 tax year, changes could be enacted for the 2018 tax year. Potential tax reform may affect your 2018 income tax liability and thus your 2017 planning. Please note that we will be providing you with a detailed summary of the changes caused by the major tax reform if/when it is enacted. You can also see our short list of year-end moves to consider in anticipation of 2018 tax reform.

Below is a list of 2017 tax planning items that we do not anticipate being affected by tax reform.

  • Life events such as marriage or being affected by a natural disaster can have a significant impact on your taxes. If you had or anticipate a significant life event in 2017, please feel free to contact us to discuss possible ways to generate tax savings.
  • Check the balance on your employer provided flexible spending account (FSA). You should use all applicable funds by December 31 if your employer has not implemented a 2 month grace period. Otherwise, you will forfeit any money left in your account.
  • Contribute to a Health Savings Account (HSA), even if you became eligible to make a contribution late in the year. You may be able to make a full year's HSA contribution even if you were not eligible to make HSA contributions for the entire year. If you have an IRS defined "high deductible" medical insurance plan and you qualify for an HSA, contributions to the account are deductible (within IRS-prescribed limits), earnings on the account may avoid taxation, and distributions are tax free if made for qualifying medical expenses.
  • Consider accelerating contributions to employer provided pre-tax retirement accounts to reduce overall taxable wages. Additionally, contributions to traditional, Roth, or SEP IRAs provide a beneficial tax planning option and contributions can be made in 2018 for the 2017 tax year (subject to applicable funding limits and due dates). If you are under the age of 59 and are planning on taking or took an early distribution from a retirement plan, please contact us to discuss possible tax consequences & exemptions.
    • Consider Roth IRA conversions - If you have reduced income in the current year or believe a Roth IRA is more suitable to your retirement plan than a traditional IRA and want to remain in the market for the long term, consider converting traditional IRA money into a Roth IRA if eligible to do so. Keep in mind, however, that such a conversion will be subject to tax in the year it is converted.
  • Take required minimum distributions (RMDs) from your IRA or 401(k) plan (or other employer-sponsored retirement plan) if you have reached age 70 1/2. Failure to take a required withdrawal can result in a penalty equal to 50% of the amount of the RMD not withdrawn. If you turned 70 in 2017, see our discussion below for options.
  • Individual taxpayers who are at least 70 years old could contribute to charities directly from their IRAs without having the amount of their contribution included in their gross income. By making this move, some taxpayers could reduce their tax liability even more than they would have if they had received the distribution from their IRA and then contributed the amount distributed to charity. Additionally, this option meets applicable required minimum distribution requirements while possibly providing opportunities to avoid other adverse tax implications.
  • Increase your income tax withholding if you anticipate a penalty for underpayment of federal or state estimated taxDoing so may reduce or eliminate an underpayment penalty.
  • Consider installing solar panels or solar-poweredwater heaters to your residence to qualify for an energysaving tax credit by December 31, 2017. Certain credits can only be taken oncein a lifetime, so please check with us to assess your eligibility.
  • If you have a vacation home rental that you also use personally, be sure to calculate the number of days that it was used for both rental and personal use in 2017.Please contact us to discuss rules regarding possible tax consequences for your rental property in 2017, and management of your personal vs. rental use of the property for future years.
  • Consider ways to reduce your exposure to the 3.8% net investment income tax (NIIT) on passive income. One option, if you intend to sell any appreciated assets, is to consider structuring the sale as an installment sale so the gain recognized is spread over several years. Another option is to consider the advantages of a like-kind exchange.



Below we have compiled a list of 2017 tax planning items which may be affected by major tax reform if changes are enacted for the 2018 tax year.
  • If you turned 70 in 2017, you can delay the first required RMD from your retirement plan 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 it is uncertain what your tax liability may look like in the coming years due to the possibility of tax reform.
    • Methods of accelerating or deferring income &deductions include timing the realization of gains on the sale of stock, Roth IRA conversions and IRA distributions, and the sale of an appreciated property. Timing deductions such as charitable contributions, property tax payments, and realizing losses on the sale of stock can also provide you with a potential tax benefit. However, it will be difficult to gauge the impact that accelerating or deferring income & deductions will have on your future tax liability due to possible major tax reform affecting 2018.
  • Consider the timing of realizing losses on stock while substantially preserving your investment position. For example, you can sell the original holding then buy back the same securities at least 31 days later. This investment strategy should be discussed with your financial advisor and weighed carefully as the potential tax savings may not outweigh the economic reality of your investment portfolio and predesigned financial plans.You should consider the uncertainty regarding the deferral of the realization of losses on stock to 2018 due to the possibility of tax reform.
  • Make gifts sheltered by the annual gift tax exclusion before the end of the year and thereby save gift and estate taxes. You can give $14,000 in 2017 to each of an unlimited number of individuals but you can't carry over unused exclusions from one year to the next. The transfers also may save family income taxes where income-earning property is given to family members in lower income tax brackets who are not subject to the kiddie tax. If you make a gift by check, make sure the donee deposits it in 2017 if you want the money to count as a 2017 gift. In 2018, the gift tax exclusion is currently set to increase to $15,000. Going forward, consideration should be given regarding possible changes to estate and gift tax rules due to tax reform.
    • Gifting appreciated stock to a charity could reap a large tax benefit. Donating appreciated assets entitles you to a charitable contribution, and also avoids the capital gains tax if you otherwise sold the stock.

We recommend that you take the uncertainty regarding potential tax reform changes into careful consideration while investigating your 2017 year-end planning options. These year-end steps are a sample of ideas to save or defer taxes and should give you some insight into your options for 2017.

As the year comes to a close, it is important for you to consider what your estimated tax liability may be for 2017.If you anticipate significant changes in your taxable income, please contact us to discuss whether making or adjusting a 4th quarter estimated tax payment may be necessary in order to avoid any underpayment of estimated tax penalties.

You should investigate these and other options thoroughly before initiating action. We are happy to discuss these with you and tailor a tax saving plan that will work best for you; please contact us with any questions you may have.



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4647 N. 32nd Street
Suite 220
Phoenix, AZ 85018
(602) 224-0166
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