AAFCPAs’ Guidance in the Home Stretch for 2016 Year-End Tax Planning

Throughout the year, AAFCPAs shares insights designed to help individuals and businesses manage their tax liabilities in light of each person or company’s unique circumstances–and to encourage clients to consider tax planning as a year-round, ongoing discipline. Personal and business circumstances are always evolving, presenting opportunities to balance or adjust short-term activities that support a long-term strategy.  We have provided for your convenience links below to a number of AAFCPAs’ tax planning articles published this past year.
As we enjoy the holiday season and approach the “home stretch” for the 2016 year-end tax planning process, we wish to highlight items for you to consider, taking into account both 2016 tax law and promised reforms for 2017.

• For individuals, maximize your 401(k) deferrals of $18,000 ($24,000 for individuals over 50 years of age). Similar limits apply for participants in 403(b) plans. Check with your employer’s Human Resource department to review your alternatives.
• Both the President-Elect and Congress have proposed to lower tax rates in 2017, to a maximum of 33%. In addition, some proposals would place a cap on total itemized deductions in exchange for the lower tax rates. Accordingly, individuals in the top 2016 tax bracket of 39.6% may wish to consider accelerating some of their 2017 itemized deductions into 2016.
• For businesses that have placed less than $500,000 of fixed assets in service during 2016, additional items purchased and placed in service may qualify for the immediate expensing under Section 179 of the Internal Revenue Code.
• Manufacturers or retailers with unsellable inventory may wish to consider disposing of such items before December, as placing a reserve on such items for financial reporting purposes does not simultaneously create a tax deduction.
• A similar rule applies to other reserves (such as bad debts), which must be written off by year-end in order to obtain a current tax deduction.

Please be mindful that other factors, such as the phase-out itemized deductions for high earners, may mitigate the benefit of any strategy discussed above. Therefore, please consult with your AAFCPAs Tax Specialist before proceeding.
If you have any questions please contact your AAFCPAs partner, or Rich Weiner, CPA at 774.512.4078, rweiner@aafcpa.com.

Related Insights from 2016

• TAX RETURN DUE DATES & FILING EXTENSIONS CHANGE
• WEBINAR OnDEMAND: AAFCPAs 2016 YEAR-END TAX PLANNING: COMMERCIAL BUSINESS, MULTISTATE, AND INDIVIDUAL & FAMILY TAX PLANNING GUIDANCE
• WEBINAR OnDEMAND: AAFCPAs 2016 YEAR-END TAX PLANNING: INDIVIDUAL & FAMILY TAX PLANNING GUIDANCE
• AAFCPAs WEALTH MANAGEMENT UPDATE: ELECTION RESULTS
• IRS SECTION 2704 PROPOSED REGULATIONS COULD ELIMINATE SIGNIFICANT ESTATE PLANNING TECHNIQUE FOR FAMILY-CONTROLLED ENTITIES
• AVOID DOUBLE TAXATION ON INHERITED ASSETS WITH IRD DEDUCTION
• AAFCPAs WEALTH MANAGEMENT UPDATE: HOW BREXIT MAY IMPACT YOUR INVESTMENTS
• 2017 STANDARD MILEAGE RATES
• NEW PRESIDENT, CONGRESS MAY MEAN CHANGES TO THE FEDERAL GIFT AND ESTATE TAX