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To Our Clients and Friends:
While many of you are making plans for year-end holidays, what should not be overlooked this time of year is year-end tax planning, especially considering the November election results. Every individual can develop a year-end tax planning strategy that reflects his or her situation, while taking into consideration the potential changes that could occur as a result of the election. We can help you prepare such a strategy, and the earlier we get started, the greater the potential maximization of benefits.
IMPACT OF THE ELECTION
President-Elect Trump proposes significant changes to the tax law including:
- Cutting individual tax rates from seven brackets with a top rate of 39.6% to three brackets of 12%, 25% and a top rate of 33%
- Eliminate the individual and corporate alternative minimum tax (AMT)
- Increase the standard deduction for individuals, to $15,000 for single filers and $30,000 for married filing separate filers
- Cap itemized deductions at $100,000 for single filers and $200,000 married filing separate filers
- Eliminate the 3.8% Medicare tax on investment income
- Cut the corporate tax rate from 35% to 15%
- Full deductibility of business capital investments
- Receive bonuses earned for 2016 in 2017
- Sell appreciated assets in 2017
- Offset tax losses against current gains (loss harvesting)
- Postpone the redemption of U.S. Savings Bonds
- Declare any special dividends in 2017
- Defer debt forgiveness income if possible
- Minimize retirement distributions
- Execute like-kind exchange transactions
- Take corporate liquidation distributions in 2017
- Bunch itemized deductions into 2016/Standard deduction into 2017
- Accelerate bill payments into 2016
- Pay last state estimated tax installment in 2016 instead of 2017
- Minimize the effect of AGI limitations on deductions/credits
- Maximize net investment interest deductions
- Match passive activity income and losses
- Maximizing retirement plan contributions
- Maximizing health savings account contributions
- Consider Roth IRA conversions to use excess deductions or if in a low tax bracket
- Harvest capital losses
- Review flexible spending account decisions for 2017
- Married taxpayers filing jointly and surviving spouses: the maximum taxable income for the 10% tax bracket is $18,550; for the 15% bracket, $75,300; for the 25% bracket, $151,900; for the 28% bracket, $231,450; for the 33% bracket, $413,350; and for the 35% bracket, $466,950. Amounts over $466,950 are taxed at 39.6%.
- Married taxpayers filing separately: the maximum taxable income for the 10% bracket is $9,275; for the 15% bracket, $37,650; for the 25% bracket, $75,950; for the 28% bracket, $115,725; for the 33% bracket, $206,675; and for the 35% bracket, $233,475. Amounts over $233,475 are taxed at 39.6%.
- Heads of households: the maximum taxable income for the 10% bracket is $13,250; for the 15% bracket, $50,400; for the 25% bracket, $130,150; for the 28% bracket, $210,800; and for the 33% bracket, $413,350; and for the 35% bracket, $441,000. Amounts exceeding $441,000 are taxed at 39.6%.
- Single filers (other than surviving spouses and heads of households): the maximum taxable income for the 10% bracket is $9,275; for the 15% bracket, $37,650; for the 25% bracket, $91,150; for the 28% bracket, $190,150; for the 33% bracket, $413,350; for the 35% bracket, $415,050. Amounts over $415,050 are taxed at 39.6%.
- $311,300 for married taxpayers filing jointly and surviving spouses;
- $285,350 for heads of households;
- $259,400 for single filers (other than surviving spouses and heads of households); and
- $155,650 for married taxpayers filing separately.
- Gross income from interest, dividends, annuities, royalties, and rents, provided this income is not derived in the ordinary course of an active trade or business;
- Gross income from a trade or business that is a passive activity;
- Gross income from a trade or business of trading in financial instruments or commodities; and
- Gain from the disposition of property, other than property held in an active trade or business.
- $250,000 for married taxpayers filing jointly or a qualifying widower with a dependent child;
- $125,000 for married taxpayers filing separately; and
- $200,000 for single and head of household taxpayers.
- $83,800 for married taxpayers filing jointly and surviving spouses;
- $53,900 for unmarried taxpayers and heads of household, other than surviving spouses; and
- $41,900 for married taxpayers filing separately.
- $159,700 for married taxpayers filing jointly and surviving spouses (complete phase-out at $494,900);
- $119,700 for unmarried taxpayers and heads of household, other than surviving spouses (complete phase-out at $335,300); and
- $79,850 for married taxpayers filing separately (complete phase-out at $247,450).
- 100 percent gain exclusion on qualified small business stock
- Conservation contributions benefits
- Five-year solar energy property
- Tuition and fees deduction for qualified tuition and related expenses
- Exclusion for discharge of indebtedness on principal residence
- Qualified mortgage insurance premiums deduction
- Nonbusiness energy property credit
- Adoption credit
- Exclusion for adoption assistance programs
- Child and dependent care (CDC) credit
- Child tax credit (CTC) and the refundable (additional) CTC
- Earned income credit (EIC)
- American Opportunity Tax Credit (AOTC)
- Coverdell Education Savings Accounts (ESAs)
- Exclusion for educational assistance programs
- Scholarship programs
- Student loan interest deduction
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