What’s proposed? What’s hearsay? What should you do no matter what?
Change is in the air in Washington, and many taxpayers are eager to understand the impact that President Trump’s policies could have on their finances. The New Jersey Society of CPAs offers some insights on what they could mean and discusses critical concerns that are important no matter who’s in office.
President Trump has promised tax reform, including lower rates for many and fewer tax brackets, as well as the elimination of the alternative minimum tax. If these proposals are enacted, it could be prudent to defer income now so that it is taxed at a lower rate later, and to make use of any available deductions while rates are higher. The president has also called for ending the estate tax, a step that could have a significant impact on many families and small business owners. However, it’s tough to predict exactly what a final tax package will look like, so the best advice is to consult regularly with your local CPA on the smartest choices for your own tax situation. And while planning for change is smart, it’s also sensible to continue to follow strategies that will make sense in any political climate.
Update: Read more about President Trump’s Proposed Tax Plan →
For example, building a secure financial foundation for your retirement is always a good idea. There’s some good news on this front in 2017, too. When you contribute to a traditional IRA, your tax deduction may be phased-out—or disappear altogether—depending on your income level. But you’ll be happy to hear that the phase-out ranges for those who qualify to contribute has risen by $1,000 from 2016 for some taxpayers. The income phase-out range is also higher in 2017 for taxpayers who want to contribute to a Roth IRA, as is the income limit for the saver’s credit aimed at low- and middle-income taxpayers. If you’re not sure whether you qualify for tax-advantaged savings, or you need advice on boosting or starting your savings for your post-employment years, be sure to contact your CPA.
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No matter what unexpected change you may face, having some spare cash on hand can help make tackling life’s challenges a little easier. CPAs recommend targeting a specific savings goal and making a regular contribution to your emergency account weekly or monthly. Your CPA can help you identify your optimum emergency savings goals and choose the best type of account for your funds.
Taxpayers who are 70½ or older must take required minimum annual distributions (RMDs) from most retirement plans. The size of your RMD is based on a variety of factors. If you have other income or simply don’t need all of the RMD, you will still have to take it—and include it in your taxable income for that year. As a result, you may want to consider making a direct contribution of some or all of that RMD (up to $100,000) to your favorite charity, since the donation amount will not count as taxable income. The rule allowing this type of charitable contribution has become permanent, so contact your CPA with any questions on using this option for reaping some benefits while giving back.
Tax laws change, but you can always count on getting personalized service and expert advice from your Alloy Silverstein CPA. Your CPA has the experience and expertise to help you address any financial concern, even in times of uncertainty.
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© 2017 Money Matters are provided by the American Institute of Certified Public Accountants.
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