Year-End Tax Planning Opportunities

Did you know that according to the Tax Foundation, the average American pays more in taxes than for food, clothing, and housing combined? Given the hustle and bustle that comes with the season, be sure to make time to connect with your tax and financial professionals to evaluate any year-end tax planning opportunities.

Planning strategies to consider:


  • Evaluate and potentially increase your withholding of state and federal taxes to help you avoid estimated tax underpayment penalties.
  • Determine whether you can shift income to family members who are in lower tax brackets in order to minimize overall taxes. The “kiddie tax” rules apply to (1) those under age 18, (2) those age 18 whose earned income doesn’t exceed one-half of their support, and (3) those age 19 to 23 who are full-time students and whose earned income doesn’t exceed one-half of their support.
  • Consider making gifts of up to $14,000 per person — the annual federal gift tax exclusion limit. You can give up to this amount to as many people as you would like. Gift assets that are likely to appreciate significantly for optimal income tax savings.
  • Review if there are ways to minimize the income tax on social security and Medicare benefits by lowering income below the applicable threshold amounts.

Business Owners

  • Accelerate expenses in the current year to lower your tax bill — such as repair work and the purchase of supplies and equipment.
  • Pay fourth quarter taxes before December 31, 2017, rather than waiting until January 15, 2018.
  • If you have significant business losses this year, it may be possible for you to apply them to the prior year’s returns to receive a net operating loss carryback refund. If you had significant income in prior years, you should maximize the current year’s losses by deferring income if possible.

Personal Residence and Other Real Estate

  • Consider making your January 2018 mortgage payment in December 2017 so that you can deduct the accrued interest.
  • Selling a primary residence? Confirm if you qualify to exclude all, or part of, the capital gains of the sale from federal income tax. If you meet the requirements, you can exclude up to $250,000 ($500,000 for married couples filing jointly). Generally, you can exclude the gain only if you used the home as your principal residence for at least two out of the five years preceding the sale. In addition, you can generally use this exemption only once every two years. However, if you don’t meet these requirements, you may still be able to qualify for a reduced exclusion if you meet the relevant conditions.
  • Selling an investment property? Consider structuring the sale of investment property as an installment sale in order to defer gains to later years.
  • Maximize the tax benefits you derive from your second home by modifying your personal use of the property in accordance with applicable tax guidelines.


  • Retirement Plan Funding
  • Maximize your pre-tax retirement plan contributions. At a minimum, contribute the necessary amount needed to maximize any employer match available to you.
  • Consider contributing to a Roth IRA or Traditional IRA.
  • Set up a retirement plan for yourself, if you are a self-employed taxpayer.
  • College Funding
  • Consider contributing to a 529 College Savings Plan or an Education IRA

Retirement Account Management

  • Review Roth conversion strategies.
  • Are you 70½? Make sure that you have satisfied your required minimum distribution by December 31, 2017.
  • Company stock in your 401(k) plan? Evaluate if a Net Unrealized Appreciation strategy can be used.

Investment Portfolio

  • Low tax rate today with an expectation of high tax rate in the future? Consider gain harvesting.
  • High tax rate today? Consider loss harvesting.

Donations to Charity

  • Consider a qualified charitable distribution from IRA assets.
  • Consider establishing a donor-advised fund.
  • Consider donating highly appreciated stock in lieu of cash.
  • Consider a charitable remainder trust.

Contact your tax professional and your Planning Alternatives Advisor to determine the appropriate strategies for you.

Deadlines for year-end retirement plan contributions

October 16 is the deadline for the following:

  • The last day to contribute to a SEP or Keogh retirement plan if an extension was filed for the tax year 2016.
  • The last day to re-characterize a Roth conversion from the tax year 2016.

December 31 is the deadline for the following:

  • Establishing and funding a solo 401(k) for 2017
  • Complete 2017 contributions to employer-sponsored 401k plans
  • Correct any excess contributions to IRAs and qualified plans.