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2017 Tax Reform
December 2017

Last week, Congress and President Trump signed into law the Tax Cuts and Jobs Act of 2017. This law has many changes that may impact how much you pay in taxes. Attached is a summary of these changes. As there are many, we invite you to reach out to your tax professional before the end of the year. Specifically, here are some questions to ask:

  1. Should I Pay my Property Tax Bill in 2017? Normally, property taxes are due in the Fall and Spring. These deductions may be limited in 2018, so it may make sense to accelerate the Spring 2018 payment into 2017 to assure deductibility. If your property taxes are paid through an escrow account, you can still pay the taxes directly through the county or by contacting your escrow agent and ask them to accelerate payment.

  2. Should I Pay my State and Local Income Taxes in 2017? State and local income taxes are still itemized deductions in 2017. In 2018, state/local/property taxes will be deductible, but capped at $10,000. If you plan to itemize in 2017 and owe state/local income taxes, paying them in 2017 should assure deductibility. Arizona taxpayers have the option of using the 4 state tax credits to pre-pay their taxes.

  3. Should I Pay my 2018 Charitable Contributions in 2017? The new tax law is updating the standard deduction with a higher amount. This means that you may use a standard deduction instead of itemizing deductions such as charitable contributions. It may make sense to accelerate your 2018 charitable deduction into 2017.

  4. ROTH IRA - to Convert or Not to Convert - Should you convert some of your IRA to a ROTH IRA? If you already converted to a ROTH in 2017, should it be reversed before end of year? The answer to these questions hinge mainly on whether your tax brackets in the future are considerably higher than 2017.

  5. For Businesses - Should I Buy NEW equipment? - Businesses will now be able to fully deduct purchases for New equipment in 2018.

  6. Retirement Plan Contributions - Ask to see if you (or your spouse) would qualify for contributions to a deductible IRA or non-deductible ROTH IRA.

  7. Medical Expenses and Health Savings Accounts (HSA) - In 2017, medical expenses are only deductible when they exceed 10% of your adjusted gross income (7.5% for retirees). In 2018 and 2019, this threshold has been reduced to 7.5%. It may make sense to defer medical expenses to 2018. Also, if you qualify for a health savings account, be sure to maximize your contribution for 2017 ($6,750/family or $8,750 family over age 55).

It is our experience that by making some strategic tax planning moves, you may be able to save money on taxes. Our hope in providing this information is that you can be better-informed to ask better questions and pay less in taxes.

We will be hosting a workshop in March outlining these changes. We will let you know the details once we have them finalized.

Please let us know if you have any questions.

Best regards,

Jared Roskelley, CFP®Bob JacksonMatthew Clay
Director of Financial Planning, JRWAChairman & Founder, JRWA
Wealth Manager, RJFS
Director of Investments, JRWA
Financial Advisors, RJFS

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. It is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Jared Roskelley, Bob Jackson, and Matthew Clay and not necessarily those of Raymond James. Raymond James and its advisors do not offer tax advice. You should discuss any tax matters with the appropriate professional.

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