Five Midyear Tax Moves for 2017

It doesn’t quite seem possible that we are nearly halfway through 2017! We are often so busy during the summer months that the last thing we are thinking about is taxes. However, the midpoint of the year is a great time to assess your tax situation as you still have plenty of time to adjust and review your planning for a positive impact. Here are five timely tax moves that you should consider now.

  1. Size up deductions and credits.

Use last year’s tax return to estimate what your highest tax bracket will be and how you can reduce your tax liability through deductions and credits. For instance, you might make deductible charitable donations of money or property to reduce your marginal tax rate.

  1. Examine your investment portfolio.

You can harvest capital losses from securities sales to offset capital gains plus up to $3,000 of ordinary income each year. You may also use capital gains to offset capital losses from earlier in the year. Planning your securities activities early will help you prepare for tax time.

  1. Take retirement plans into account.

When possible, boost contributions to retirement plans within the generous tax law limits. You may also be able to supplement your retirement plan at work with contributions to an IRA plan. On the flip side, you’re generally required to take annual required minimum distributions from retirement plans after reaching age 70½. Keep that in mind if you will reach that milestone this year.

  1. Focus on higher education.

If you have a child in college, you may be able to claim higher education credits even if the child graduates this year. However, each credit is phased out for upper-income taxpayers. The tuition deduction expired after 2016, so make sure to plan for the best use of the remaining education tax benefits.

  1. Update your estate plan.

Finally, review your estate plan to ensure you’re maximizing tax benefits. Currently, transfers between spouses are completely exempt from estate and gift tax, while other transfers are sheltered by a $5.49 million exemption in 2017 ($10.98 million for a couple). However, estate tax reform remains a strong possibility in 2017. We will, of course, keep you updated on any developments.
These are just five possible midyear tax planning moves to consider. In between summer picnics and family outings, we’d encourage you to schedule a midyear appointment with us to review actions that might be beneficial to you at tax time next year. It will be here before you know it!