Year-End Tax Planning

Written by Stevens Group December 8, 2017

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Another year is rapidly coming to a close which is the perfect time to plan strategies to reduce your federal income tax for 2017.
Whether you are an individual tax filer or a business tax filer, year-end planning can save you income tax. Common ways to save tax is claiming contributions of either cash or non-cash items to charities. If you are a business owner you can be strategic about major purchases. Maximize the education credit deduction buy paying tuition by December 31.
Contributions of either cash or non-cash item
Verify that you are contributing to a qualified organization and be sure to get receipts. For contributions of property or non-cash items this more complex. It is advised to document all items that were contributed and value them based on the fair market value (FMV). FMV is what a willing buyer would pay a willing seller when neither has to buy or sell and both are aware of the conditions of the sale. Most organizations that take property contributions have valuation guides that can help assess the value.
Education Credit
By paying tuition for the Spring 2018 term by December 31, 2017, you can possibly increase the allowable education credit. Also be sure to validate that credit by downloading the account transcripts from the student account that show the amounts of payments and the dates they were paid. This is required by IRS to support your claim to that credit.
Business Expenses
Consider pulling the trigger on that larger purchase before 12/31 to be able to take a deduction in 2017. As a rule, it needs to be purchased and functioning by 12/31 to qualify BUT be cautious with this strategy. As a business owner, there are many reasons this might not work for you.
As with all issues related to income tax, there are pros and cons with these strategies. Ask us what will work best for your specific income tax situation.

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