Things you may wish to do by 12-31-17
(most assume/require that you can itemize deductions)
(a few may have no effect, if you are subject to AMT)
* Please review my 1st 2017 Year-End Tax Planning email sent 10-1-17. It's on my website too!
* Review the 2017 Tax Planning Brochure provided to you
(in last years blue tax file or provided at our initial meeting)
* Review all "blogs" regarding tax issues - archived at www.garlandtaylor.com
Here's 2 basic tax planning questions
"will your income in 2018 be the same or higher?"
"do you believe tax rates will increase in 2018?"
* Most taxpayers want to reduce taxes in the current year. That can be accomplished by deferring taxable income - examples: waiting until 2018 to bill clients & sell stocks with gains or by accelerating expenses - example: making donations, paying taxes, or buying supplies/equip now
* However, if you believe tax rates or your income will be higher in 2018 - you may choose to do the reverse - and accelerate taxable income into 2017 & defer deductible expenses until 2018.
The White House is proposing new tax law changes that could remove most itemized deductions, but retain deductions for mortgage interest & charitable donations. The standard deduction may increase. The AMT tax & Estate taxes may be gone. Tax rates may be reduced for flow-through entities (some s corporations & LLC's) and corporations. Nothing is certain as of this date, but be sure to consider such possibilities when you tax plan...
https://www.whitehouse.gov/taxreform
* Here's a link to online tax planning topics & tools from the AICPA, of which I am a member. American Institute of Certified Public Accountants (aicpa) is the national organization.
Note: If web links don't work, please just copy & paste the link into your browser (sorry!)
Tax deductions/credits -> http://www.360financialliteracy.org/Topics/Taxes/Tax-Deductions-and-Credits
Year-end planning -> AICPA - great link for Year-End Planning
http://www.360financialliteracy.org/Topics/Taxes/Income-Tax
More tax information from AICPA http://www.360taxes.org/
* IRS Tips https://www.irs.gov/uac/Tax-Tip-Archive
* IRS Affordable Care Act provisions
https://www.irs.gov/Affordable-Care-Act/Affordable-Care-Act-Tax-Provisions
* Recent IRS Tax Acts & news-> https://www.irs.gov/uac/Latest-News
* Federal Energy Tax Credits -> https://www.energystar.gov
* Oregon Residential Energy Credits -> http://www.oregon.gov/ENERGY/
A g a i n - d o i t b e f o r e 1 2 - 3 1 - 1 7
* Pay any Oregon state taxes that you know will be owed (using Form 40-V)
* Pay all real estate taxes (that are due 11-15-17), if only a partial payment was made.
* Pay your mortgage payment before 12/31, if it is due early in January 2018
* Talk with your pension advisor regarding retirement planning and contributions.
* Talk to your investment advisor regarding benefits in selling and/or keeping investments.
* Talk with your attorney regarding modifications in personal wills & business agreements.
(Please note that I am not licensed & do not provide investment, pension, or legal advice)
* Go through your closets & garage & consider contributing items to a qualified charity. Be sure to keep a detail of values (cost & used value) & take pictures. AND, you must get a receipt from the charity. (You can find Goodwill & St Vincents valuation guides online or document the value yourself)
* Make charitable contributions by check or credit card & get written letters of acknowledgement.
* Defer income to 2018 & accelerate expenses into 2017, if that makes sense (see above & tax planner) But, if you believe your 2018 taxable income will be higher or tax rates will increase next year - just reverse that basic tax plan)
* Paying college tuition now might increase the tax credits for higher ed (see planner & articles. there are income & other limitations)
* Bunch deductions - There are "floor" limits for medical (10% of adjusted gross income/AGI) & misc (2%) so, either pay expenses now in 2017 or later in 2018 - to "bunch" & exceed limits
* Take any required distributions (70.5?) from your retirement plan, or face a 50% penalty. https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-req...
* Use annual gift tax exclusion. No gift tax on gifts up to $14,000 per recipient
* Use your credit card to pay tax deductible expenses, if you need to
* Get health insurance, or face possible penalties
https://www.irs.gov/uac/Newsroom/Tax-Facts-about-the-Affordable-Care-Act...
* BIZ - Buy equipment, IF you need it (must be received & placed into service by 12/31)
(careful - see the luxury auto & SUV rules... Which may limit the amount deductible)
* BIZ - C corporations - pay bonus? or pay dividends? (fyi, some complex tax issues)
* BIZ - S & C corporations - make sure you have paid reasonable wages for your services during the year & have support for that.
* BIZ - If you sell inventoriable items, you must physically count at year-end (at your cost)
* BIZ - S corporations. Make sure you have sufficient stock basis to claim any losses.
* BIZ - If officers have incurred/paid expenses personally - reimburse officers from the corporation under an accountable plan (mileage rates are 53.5 cents per mile, for 2017)
* BIZ - If there are officer loans on the books, get rid of them if possible (to reduce audit risk).
OK - Here's also a few things to do AFTER the year ends...
* BIZ - File 2017 Forms 1096/1099's by 1/31/18 (order them NOW at 1-800-829-3676)
(for rent, dividends, interest, services, etc that you paid in 2017. Order free forms by phone or online NOW at https://www.irs.gov/Forms-&-Pubs It will take a few weeks to get them!
* BIZ - File Personal Property Tax Reports with County assessors office by 3/15/18 (every Oregon business must file - check with your assessors office for forms) If you filed last year, you should receive a 2017 form in the mail. Or call your Assessors office. (Here's a link to information & the online form, when it becomes available) https://multco.us/assessment-taxation/business-personal-property-assessment just click on "confidential personal property return"
Foreign bank & financial accounts - you may be required to file with the FBAR by APRIL 15, 2018. This is a new change (prior years were due June 30th) https://www.irs.gov/businesses/small-businesses-self-employed/report-of-...
Here's a summary of what I am doing for year-end tax planning before December 31st
P E R S O N A L
* Paying my mortgage, even though the payment isn't due until January
This move should add another months worth of interest onto the Form 1098
* Confirming that my bank paid all real estate taxes due
Next year, pay all tax by 11-15 & get a 3% discount + maximum itemized tax deduction
* Gathering "piles" of unused clothing & household items to make a final Goodwill trip
Be sure to make a detailed list and get a paper receipt from charity. I take pictures of items too - really!
* Paying my 4th quarter Oregon estimated tax payment (40-V) even though it's not due until January
* Setting up a bright red folder marked "TAXES" and will place all 2017 tax documents there as they come in
Form W-2's, 1099's & Form 1098, pension data, property taxes, donation receipts
* Locate and copy purchase invoices & support for any tax credit items (1099-T, for tuition, etc)
* Order new Quickbooks software & download the software by 12/31. The Scanner I bought last year & paperless workflow is going well! The software cost is small, so I'll expense it this year (using the IRS "deminimis" election), reducing my taxable income.
Be sure to categorize any/all 2017 equipment or software purchases under $2,500ea as EXPENSES (not fixed assets) in your accounting software, to achieve that accelerated expensing.
B U S I N E S S
* Reimbursing myself (from my s corp) for all 2017 biz mileage & business expenses purchased on a personal card. note: sole proprietors & single member LLC's don't need to reimburse, just keep good detailed records
* Purchasing business supplies, paper, and postage. Reviewing equipment & software needs
* Paying my corporate payroll taxes due 1-15-18, early & by Dec 31st (I am a cash basis biz).
* Paying my office rent that is due January 1st (I'd pay business insurance too, if due Jan/Feb)
* Entering all my accounting data into Quickbooks and reconciling my bank balance now
12/31 statement can be gotten online so I don't have to wait for bank. I know my data in QB is accurate.
* Order tax forms NOW (1099's, 1096, W-2, etc) from the IRS. This will take several weeks, so do it now.
* Complete my personal property tax report (County Assessor should mail those out, later in December. If you filed last year)
Tax Records - how long to keep?
https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Recordke...
Keep forever - all tax returns, real estate basis & improvement records
Keep for 7+ years - all evidence to support taxable income & deductions
(W-2's, 1099's, receipts, cancelled checks, logs, retirement plans, donations, etc.)
If your 2017 taxable income, deductions, withholding, or estimates paid have changed
significantly, it is recommended you engage my firms services to perform a formal tax projection. (to anticipate taxes due & determine if additional estimates are required to avoid penalties)
For my corporate & LLC tax clients - If you haven't asked me to look at your 2017 Quickbooks or other accounting data yet - that's overdue & now's the time, so I can still be able to peruse the file & comment before 2018. If you are cash basis - NO changes can be made after 12/31.
If you need help with filing form 1099's, sales or personal property tax reports, or reporting foreign accounts - please request that in writing (as these are not part of the income tax services provided. please see your engagement letter, if you're a client).
For my individual income tax clients... I look forward to working with you again!
Your Tax Organizer & appointment will be mailed to you in late December or early January (or I can email you a pdf copy instead, just ask!). If you have a request for a specific time range or day of the week, let me know soon as I'll preschedule many clients based on last years meeting.
Or, if you'd like to try something new - i can email you an "electronic tax organizer" this year (you take photos of all your documents & upload those through an Intuit server), just let me know & we can use that new technology this year!
This is my 2nd & final 2017 tax planning email - so please email if you have any questions.
Be sure to watch for potential tax changes in the Congress too!
Thanks again for your business & have a great Holiday season!
Garland
Garland R. Taylor, Pres.
Garland Taylor CPA PC
(503) 287-5584
(503) 287-6370 fax
www.garlandtaylor.com
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