Looking Ahead to the 2017 Tax Filing Season

Looking Ahead to the 2017 Tax Filing Season

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Now that 2016 Election is past us, there will undoubtedly be many changes on the landscape.  There are several things that you need to know now, and several things you can do now in anticipation of the 2017 tax filing season.

First and foremost, there are several changes in the due dates for some Federal tax returns.  Most of these changes primarily affect flow-through entities which provide Schedule K-1s to partners or shareholders.  The changes were made in order to ease the tax preparation and filing process for taxpayers.  While there is only one change that directly affects individuals, the other changes are substantial and may take a little adjustment.  See most of the changes below:

 

FORM & RETURN TYPE OLD DUE DATES NEW LAW & DUE DATES
Form 1040 – Individual April 15,   Oct. 15 April 15,     Oct. 15
Fin CEN Report 114

Foreign Bank and Financial Account Reports

June 30 April 15,     Oct. 15
Form 1041 –   Trusts/Estates April 15,  Sept. 15 April 15,     Sept.30
Form 1065 –   Partnerships April 15,  Sept. 15 March 15,  Sept. 15
Form1120S–  S Corporations March 15, Sept. 15 March 15,  Sept. 15
Form 1120 –  C Corporations (calendar year) March 15, Sept. 15 April 15,     Sept. 15
Form 990:

Exempt Organizations

May 15, Aug.15,Nov 15 May 15,     Nov 15

Thinking about whether it’s too late to reduce your taxes for 2016? Of course it’s not too late!  Now is the time to review your income and deductions and take a few moments to think about where you are right now, where you’d like to be and what you can do about it. Year-end tax planning is the perfect opportunity to pause and take stock in what’s occurred in 2016. How do you think 2016 will compare to 2017? Will you be in a lower tax bracket in 2017?  What life changes are on the horizon? What should you do?

Defer income/accelerate deductions

  1. Income: Are you expecting a bonus at the end of the year? Do you have the ability to postpone that into 2017? Thinking about exercising options? Should you wait until January or take in the income before the end of the year?
  2. Deductions: Do you expect to be subject to the Alternative Minimum Tax? If not, perhaps prepay property taxes and state income taxes before December 31.
  3. Charitable Contributions: Considering making a large donation to a charity? Why not make the donation before December 31st and obtain the deduction in 2016.  Not sure where to donate, why not set up a donor-advised fund, take the deduction in the current year, and decide later which charities to donate to.
  4. Have you realized capital gains? If you do, check your portfolio for securities or mutual funds that have declined in value, perhaps you can realize losses to offset these gains. There is a dollar for dollar offset.

Accelerate income/postpone deductions

  1. Find yourself subject to the Alternative Minimum Tax? Why not postpone your state tax payment and real estate taxes until after January 1st? Consider accelerating retirement distributions/ bonuses or exercising non-qualified options– you may either bump yourself out of the AMT or may even end up paying a lower tax rate on this additional income.  The top AMT tax rate is 28% vs the top ordinary tax rate of 39.6%.
  2. Do you have appreciated stock in your portfolio? Consider selling long term holdings and get the benefit of a reduced tax rate.

IRA Required Minimum Distributions/Qualifying Charitable Distribution

  1. Are you faced with taking your required minimum distribution (RMD) reluctantly? Taxpayers age 70 ½ and older can accomplish two goals at once. If you are contemplating making a charitable donation before the end of the year, why not take your RMD and make a qualifying charitable distribution from your IRA?  You will be accomplishing your charitable bequest and complying with the law with respect to your required minimum distributions.  While you will not be entitled to the charitable contribution, the distribution is tax free.

Self Employed

  1. Do you have a formal retirement plan? Have you calculated what your potential contribution will be? Keep in mind, the plan must be opened before December 31st, but you have until the due date of your return to make your contribution.

Businesses

  1. Section 179 depreciation and 50% bonus depreciation

For 2016, the maximum amount of qualifying property a business can expense is $ 500,000. If your business is anticipating a significant increase in taxable income, perhaps consider making that large business purchase and be eligible to write off $500,000 as Section 179 depreciation, plus 50% of qualifying additional purchases.

Gifting

  1. The 2016 annual gift tax exclusion is $ 14,000 – consider making those last minute tax free gifts while reducing your estate.
  2. Interested in making contributions to a 529 college savings plan? Consider making 5 years of annual exclusion gifts to a donee’s college 529 plan tax free. That would be $14,000 x 5 or $ 70,000 in contributions.  Annual gift tax returns must be filed for 5 years to document the gift.

You may think it’s too late, you may think the year is as good as over already, but you still have time.   Why not take a few minutes to take stock in your tax picture thus far; you may be surprised at what you can do.

Maryanne T. Reyes, CPA, PFS Maryanne T. Reyes, CPA, PFS
T (973) 898 9494
[email protected]

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To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

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