New Tax Bill
A new Tax Bill was introduced in early November and we can be sure of at least one thing: future tax rates are going
to change. Because this is a year-end 2017 letter, our guidance in this letter is aimed at 2017 tax planning rather than
predicting 2018, but one thing we are pretty sure of is that tax rates will be lower in 2018. Please contact us for
specifics, but the general guidance for most taxpayers is to accelerate expenses into 2017 and delay (where
possible) income until 2018. The new tax bill may modify that guidance as the year comes to an end, so we strongly
suggest that you speak with us near year end to make confident tax planning decisions for 2017 and 2018. We are
once again making our tax organizers available, for free, to anyone who requests one-if you have not used one in the
past please call the office to request one for 2017, as it is our attempt to be as thorough as possible in the preparation
of your return. If you received an organizer last year we will mail this year’s organizer to the same address. The tax
organizer may not be enough however, and we wanted to bring some special items to your attention below.
Security and Identity Theft
The IRS has determined that one of the prime targets of data theft is tax preparation companies. This year we
attended courses designed to improve the protection of our firm and your confidential data. One of the mandatory
changes we are implementing immediately is our new “no-click” policy combined with a new information transfer
policy. Because so many electronic intruders get in via email attachments, our firm has instituted our national tax
professional security advisor’s recommendations and implemented a “no-click” e-mail policy. This means we will not
open any documents that you have sent us via email-a mandatory solution, which when combined with our latest
security software and other steps makes it extremely difficult for electronic intruders to get through our defenses. This
brings the question about how you will transfer data to us, and vice versa. We now will accept data from you in 4
ways: surface mail; drop-off; fax; or mandatory upload to our web portal. We know these changes will cause some
hassle on your (and our part) but it is the best way to protect your and our confidentiality.
Affordable Care Act
Contrary to popular belief you must still have qualified health insurance for all family members in 2017 or pay a
penalty. Many Americans are joining “Health care sharing ministries” for health insurance, but there is no tax
deduction allowed with these types of plans, even though they keep you from paying a penalty for not having
insurance. If you received a Form 1095 from any issuer or agency we MUST have all copies to prepare your
ALL deductions of any amount must have a receipt. Any individual contribution over $250 must also have an
acknowledgement letter from the charity, and the letter must be dated by the date we file your return. The letter
should show the date and amount of any individual contribution over $250, and should also state that no goods or
services were received in return for the contribution.
If you are over 70 and ½ with an IRA please contact us before the end of the year before you make any charitable
contributions so we can lower your tax bill with a simple action on your part.
New rules may change home mortgage interest deductions, so for any refinancings, equity line draws or new loans
we must know if the money was spent to buy, build, or improve your personal residence. We also must obtain Form
1098 from you when you pay mortgage interest. Additionally we must obtain refinancing closing statements.
Stock Gifts and Losses
We find many clients that have stock they purchased many years ago in companies that have gone bankrupt. Go
through your records and memory and let us know if you have any “worthless” stock so that we can deduct the losses
now. Additionally, if you have a stock whose value has increased you may wish to donate it to a charity by the end of
the year instead of donating cash in order to obtain much better tax treatment.
Roth IRA Conversions
You will be continue to hear from lots of “experts” this year that you need to convert your retirement accounts to Roth
IRAs. While there are a number of advantages to conversions, there are an equal number of disadvantages that carry
some major tax consequences. Please do not convert your accounts in 2017 without coming in to see us for an
appointment to discuss both the positives and negatives. All conversions for 2017 must be completed by
December 31, 2017.
If you have any income from BitCoin, AirBNB, Turo, Etsy, EBay or similar consumer to consumer programs, please
let us know because many income tax rules are affected and few of these sites provide you with adequate tax
information. Our engagement letter also discusses this concern.
The simplest and most effective tax planning tool for all Americans of all income levels is full participation in
retirement plans. Make sure you maximize your 401-k deferral if available, contribute to tax-deductible IRAs.
Check your employee handbook and see what other fringe benefits are available at work and call us if you aren’t sure
if it will benefit you. Some of the best fringe benefits provided by employers include cafeteria (or 125) plans, as well
as child care plans and wellness programs. Many taxpayers have unused amounts left in pre-tax healthcare flex
spending (cafeteria/125 plans). If this includes you get your check-ups, shots, dental work or new glasses taken care
of before the end of the year.
There is still time to setup an appointment for year-end tax planning by December 31. We recommend a meeting if
you have had any major changes during 2017 or are expecting major financial changes in 2017 or 2018 such as
retirement, inheritances, etc.
Future Income Tax Rates & Other
We highly recommend that when you are getting your information to us for your 2017 Federal tax return that you set
an appointment for an after tax season “Tax Tune Up” to examine tax and estate planning strategies. Because of the
new tax bill if your family income is over $100,000 it is almost mandatory that we meet for future tax planning
because of surtaxes.
There are literally hundreds of other changes, extensions and deletions that we will consider this year while preparing
your return. Because of these changes we are requesting everyone to try to have their tax information in to us at least
two weeks earlier than normal, and no later than March 21, 2018. Please rest assured that we will utilize our best
resources to once again provide you with timely, complete and accurate service while keeping your tax burden to the
lowest legal amount. Thank you again for your continued support