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Fall brings about many changes. Autumn’s beautiful foliage arrives. Thanksgiving and Christmas approach. Another year begins to wind down. During this season of transition, the average family does not think much about taxes.
Of course, you are not average, or you would not be taking time to read this column. Now is the time to conduct 2017 tax planning and think about 2018 tax planning as well. A proactive approach to tax planning now can help you make material changes while there is still time.
We just sent a tax planning package to the families we serve. The package may also be requested online at wordpress-128435-380520.cloudwaysapps.com. The tax package asks individuals whether they have experienced various life events in the previous year. It also asks about events in the past year that may have affected parents or adult children.
Most people benefit from conducting intentional and comprehensive tax planning annually. The tax package we refer to above focuses specifically on identifying situations that may impact an individual’s tax status.
Marriage, the death of a spouse and divorce may all change how income is reported to the IRS. Certain birthdays can also affect taxes. Have you reached the magical age of 59.5 or 70.5? Rules governing tax-deferred withdrawals begin to change at these milestone birthdays. While taxable income does not change, new rules and responsibilities affecting taxation come into play.
Families often question why we ask about the situations of parents or adult children. First and foremost, we want them to be aware of opportunities to reduce tax liability. We also realize that when significant life events happen, tax planning is the last thing on people's minds. It is not natural to consider the tax implications that accompany being laid off or divorced. Nor is it natural to think about income taxes upon receiving a terminal diagnosis. Regardless of life’s events, taxes march on. Our objective is to help individuals minimize financial burdens and make the most of a potentially bad situation.
The tax package serves as a reminder of year-end tax planning. It also helps individuals prepare for the year ahead. What do you expect in 2018? Perhaps you’d like to contribute to a church building fund. Maybe you are planning a wedding. Retirement will certainly affect your income. Any of these future issues should prompt financial considerations today.
Many people believe there are two tax codes: one for the rich; one for the poor. I believe the two codes relate not to wealth and income, but rather to knowledge and action. Some individuals stay informed about tax codes while others remain uninformed. Sadly, some people know they should do something about their tax situation, but never take action.
Please don't fall into the trap of saying, “My CPA takes care of this.” Even the best professionals cannot turn back time. Once midnight arrives on December 31, many choices you can make now will be lost forever.
Tax advice provided by CPA’s affiliated with Financial Enhancement Group, LLC.
Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column offset=”vc_hidden-lg vc_hidden-md vc_hidden-sm”][vc_widget_sidebar sidebar_id=”sidebar-main”][/vc_column][/vc_row]