Tax Saving Strategies. This Presentation 2017 Jeff Birnbaum, CFP, EA All Rights Reserved.

Transcription

1 Tax Saving Strategies This Presentation 2017 Jeff Birnbaum, CFP, EA All Rights Reserved.

2 Income Tax vs. Theory of Relativity The hardest thing in the world to understand is the income tax. -- Albert Einstein* *source:

3 Common Mistakes to Avoid: Tax Terminology

4 Common Mistakes to Avoid: Tax Penalties Penalty for Underpayment of Estimated Tax Federal and NY income taxes operate on a pay-as-yougo system. Take into consideration significant life changes such as marriage, divorce and the birth of a child, all of which can impact taxes.

5 Common Mistakes to Avoid: Tax Penalties Failure to File Penalty When you don't file your tax return by the return due date, or by the extended due date if an extension to file has been requested and approved.

6 Common Mistakes to Avoid: Tax Penalties Failure to Pay Penalty When you don't pay the income tax liability in full by the due date. An extension to file does not extend the time to pay.

7 Common Mistakes to Avoid: Missed Opportunities If opportunity doesn't knock, build a door. -- Milton Berle Adjustments Decrease taxable income Include: Health Savings Account deduction, Deductible part of self-employment tax, Student loan interest deduction

8 Common Mistakes to Avoid: Missed Opportunities Standard Deduction Decreases taxable income Itemized Deductions Decrease taxable income Include: Medical Expenses, State/Local Income Taxes, Charitable Contributions

9 Common Mistakes to Avoid: Missed Opportunities Credits Decrease income taxes dollar-for-dollar Refundable and Nonrefundable

10 Common Mistakes to Avoid: Failing to Consider State Income Taxes State income tax laws are not necessarily the same as the Federal income tax laws If you are a NY resident with income from another state (e.g. NJ or CT), you may owe income taxes to that other state as well as to NY.

11 Common Mistakes to Avoid: Filing Inaccurate Tax Returns Who is responsible for mistakes made on your income tax returns, you or the tax preparer?

12 The First Word on Year-End Planning Tax planning should not only be a year-end event While the end of the year presents a deadline for implementing some planning strategies, done properly, tax planning should be an ongoing process.

13 Income Tax Planning: Shift Income Between Tax Years Take advantage of moving to a lower tax bracket if Your taxable income will be lower The tax brackets change (Tax Reform 2017?!)

14 Income Tax Planning: Shift Deductions Between Tax Years Bunch deductions together in one tax year by strategically timing your payments.

15 Income Tax Planning: Long Term Care Insurance Credit Long Term Care Insurance Itemized deduction on Federal return 20% credit on NY return

16 Income Tax Planning: Save For Retirement Consider making deductible contributions to retirement savings accounts For example, 401(k)* and 403(b)* employer plans, Traditional IRA accounts *especially if your employer matches contributions

17 Income Tax Planning: Tax Efficient Investing Talk to a Certified Financial Planner TM Professional For example, about tax loss harvesting

18 Income Tax Planning: Miscellaneous Make the world a better place by donating to charitable organizations. Charitable contributions can be itemized, reducing taxable income and, as a result, decreasing the amount of income taxes. Saving for college: Don t forget about the NYS 529 Plan contribution exclusion.

19 Other Year-End Planning Suggestions Financial Planning Create or Update a Written Financial Plan Investment Planning Conduct a Year-End Portfolio Review Estate Planning Create or Update Estate Planning Documents

20 Jeff Birnbaum, CFP, EA Financial Planner*, On Point Financial *Securities offered through HD Vest Investment Services SM, Member SIPC, Advisory services offered through HD Vest Advisory Services SM. On Point Financial is not a registered broker/dealer or registered investment advisory firm.