What You Need To Know Now About Tax Reform

You probably have heard all about the upcoming tax reform bill and know that legislators are likely to vote on the final version this week. Although nothing is final, there are numerous proposed changes that are highly likely to affect you, your estate plan, and those of you who own businesses.

We are following every step of the process and will keep you informed. Please save the date: on Wednesday, January 31st at 1:00 p.m., Bill Conway will lead a seminar on key changes in the tax law and how these may affect you. In addition, we will offer one-on-one consults and will continue to post updates.

This month, you may want to consider taking the steps below. As always, please contact us to ensure that the actions you take are in your best interest, based on your unique circumstances.

  1. Prepay State, Local, And Property Taxes

According to the latest information we have received, bills in the House of Representatives and Senate include some limitations on the deductibility of state, local, and property taxes. The deduction for state and local taxes may be eliminated and real estate tax deductions may be capped at $10,000, or, per recent rumblings, deductions for state, local, and property taxes may be capped at a total of $10,000. You may want to prepay these before the end of this year, after carefully considering whether this will subject you to the Alternative Minimum Tax or other consequences.

  1. Accelerate Charitable Giving

Both bills include a higher standard deduction and fewer itemized deductions. If you believe that your 2018 itemized deductions will be lower than the 2018 standard deduction, you may want to move 2018 planned giving up to this year. In the future, you may want to group your donations into payments every two to three years, so that you maximize the benefit of charitable donations.

  1. Watch Out For Mandated FIFO

It is possible that the final bill will require that you use the first-in, first-out accounting method, or FIFO, when selling individual securities. If this happens, you will have less flexibility to manage the tax consequences of transactions, and so you may want to diversify this year. In addition, you may want to consider more aggressively harvesting tax losses. We would be happy to collaborate with you and your financial advisor on these matters.

Please contact us to learn more or to schedule a one-on-one consult on how the changes will affect you.