It’s never too early to start considering your tax implications for next year. To maximize your income, we’ve compiled a list of the best tax planning tips for 2017 that a tax-planning lawyer would be likely to recommend to you. Consider the options below, and get your tax-planning ready early for 2017.
Consider the Value of Income Tax Deferral
There are some benefits to certain individuals who may wish to defer their income tax liability for another time. Right now, there’s one huge reason why some people should consider doing this, and it’s the same reason why many tax-planning attorneys are recommending this strategy. President Trump has promised to lower tax rates in upcoming years, which means taking this route can save individuals large amounts of money.
Right now, the top income tax rate runs at 39.6 %, and Trump’s goal is to bring that rate down to 33% over the next few years. People in the higher income tax brackets could utilize this strategy and save tax costs. However, single taxpayers earning $127,500-$200,500 per year may fall into a higher tax rate under Trump’s new tax goals, and these individuals may want to consider taking the opposite option and pay for 2016 tax rates, which could be lower for them.
Take a Look at Capital Gains
Some individuals may wind up having to pay more in long-term capital gains tax planning if Trump’s tax plan kicks in. Trump’s proposed 20% tax rate would bring up capital gains tax rates for single taxpayers making more than $127,500 a year and married couples making more than $255,000. With this in mind, people falling into this category may want to start selling off assets that might cause them to pay long-term capital gains taxes prior to Trump’s new plan’s approval, since the current rate is 15%. Short-term capital gains, or assets that a person has owned for one year or less, will fall under the usual income tax rates under Trump’s new plan.
Report Your Charitable Contributions
Right now, people who make charitable contributions can take an itemized deduction as a result of donating to a charity. The number of itemized deductions a person with a higher income can take is less than what a person with a lower income can claim. However, Trump plans to place more restrictions on these types of itemized deductions. Once these restrictions are enacted, single taxpayers will only be able to claim $100,000 in itemized deductions, and married couples $200,000. With this potential change coming soon, people who want to get the most out of their donations to charity in tax deductions should take advantage of the current rate.
Most taxpayers need to decide whether or not their tax rates will be affected in a positive or negative light once Trump makes his proposed tax changes. Knowing how both income, assets, and deductions might change once Trump’s administration alters tax laws should help taxpayers make the best informeddecisions about how to handle their taxes in 2017.
If you are ready to talk start planning for the next big tax event, contact the experienced tax planning lawyers at Brunoro Law today.
Posted in: Tax Planning