What’s better done in fall than spring? Often, the answer is taxes
BY CHRIS WALDEN
Financial Planning Association of Greater Kansas City
OCTOBER 01, 2017 6:12 PM
Fall is upon us and it’s a good idea to start thinking about your 2017 tax return now.
While most people wait until March or April to file, there can be advantages to filing early. Some deductions may be lost if you don’t act by Dec. 31.
It’s wise to engage your CPA in these planning strategies now and early in 2018 when they typically have more time to assist.
Congress is currently considering tax legislation. Some parts of the bill could be “retroactive,” meaning they will go in effect for the 2017 tax year. We should monitor this situation and its potential effect on this year’s tax return.
Year-end tax considerations
It’s a good idea to estimate what your capital gains distributions will be for the year. Most mutual fund companies will tell shareholders ahead of time what they plan to distribute to shareholders and when.
It’s possible for an investor to avoid these gains in some circumstances. It’s also a good idea to determine if any capital gains losses are available and if so, if it would be wise to sell before the end of the year to “harvest” these losses and reduce capital gains taxes for 2017.
To lower taxable income, be sure to maximize contributions to 401K and other retirement accounts.
While 2017 IRA and Roth IRA contributions can be made until April of 2018, employer sponsored retirement plans typically have a contribution deadline of the end of the calendar year.
Determine if there is money left in your Flexible Spending Account.
Will it be lost at the end of the year? Deposits to Health Savings Accounts and 529 Savings Plans can be valuable ways to save for health care and education expenses while reducing current income, but their contribution deadlines are Dec. 31.
Be sure to make any charitable contributions by the end of the calendar year and don’t forget to save receipts for “non-cash” contributions to organization like the Goodwill and Salvation Army.