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TAX REFORM
AND YOU
The IRS is still mulling over the new tax act to provide guidance
to professionals and taxpayers. However, there are opportunities
that do not require waiting. Here are a few ideas that might apply
to your specific situation which you should discuss with your tax
advisor.
First, consider the new law doubles the standard deduction to
$12,000 for single taxpayers and $24,000 for joint filers. Thus, many
taxpayers will no longer find it beneficial to itemize deductions.
Are there ways to maybe use the standard deduction in one year
and still itemize deductions in another?
You may find it advantageous to “bunch” your deductions every
other year. As an example, instead of paying real estate taxes in
each year, pay current year taxes in January of next year and then
pay next year’s in the following December. You double up the
itemized amount every other year. Of course, you are limited to a
$10,000 deduction in any year for state and local taxes.
Another way to bunch your deductions is with charitable
deductions by using the same approach. There is no cap on charitable
gifts. Contribute to your university, place of worship, or any
qualified charity in a lump sum in January for the current year and
then make next year’s contribution early by paying in December
90 TAMPA BAY MAGAZINE | JULY/AUGUST 2018
V. Raymond Ferrara, CFP®
Chairman
Chief Executive Officer
Eric R. Ebbert, MBA, CFP®
President
Chief Operating Officer
of the same year. In each of these two examples you would then
use the standard deduction in the “off” year.
Further, if you are over age 70 ½ consider using your IRA to
make charitable contributions by having the IRA custodian send
the contribution to a qualified charity directly. These contributions
count towards your Required Minimum Distribution (RMD). You
will not get a deduction, which you might not anyway because of
the higher standard limits, but you will not pay income taxes on
the distribution either. Thus, there is still a tax savings.
If you find yourself holding stock which has a large capital gain
and you have an elderly parent, consider gifting the stock to your
parent with the proviso that when they die, the stock will come
back to you. If they live a year after the gift is made then you will
receive a step up in basis. If they live less than a year you get it
back with no step up, but you are no worse off. In the alternative,
you could have it willed to your children if it is less than one year
and they will get the step up because they were not the donor. Of
course, it is no longer part of your net worth.
We have other ideas about income and estate taxes to share and
would welcome an opportunity to discuss them with you as we
offer a no obligation one hour consultation. Please give us a call.
About ProVise Management Group, LLC: ProVise is a financial planning and investment management firm registered with the Securities and Exchange Commission (SEC)
and has been in business since 1987. Our 14 professional advisors serve approximately 1100 clients in over 30 states. As of 06/30/18 we were managing approximately
$1.445 billion for our individual, corporate, not-for-profit and 401k retirement plans. Please visit our website at: provise.com. Investment Advisory Services offered through
ProVise Management Group, LLC. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations
are complex and are subject to change.