Now that you’re finished filing your 2017 tax return (or with your 2017 tax return filed away for an extension), taxes might be the last thing on your mind right now. However, to get the most out of tax savings now is the best time to begin planning for 2018. It has become especially important to get a head start because the Tax Cuts and Jobs Act (TCJA) has significantly changed the tax environment.
Your overall tax liability for the year is going to be affected by a tremendous number of variables. Viewing these variables at the start of the year can help you spot more opportunities to cut your 2018 tax bill.
For example, you can affect the rate you pay and when you pay through the timing of income and deductible expenses. By frequently reviewing your expenses, potential tax, and year-to-date income, you may be able to time income and expenses in a way that lessens or at least defers your tax liability.
In other words, tax planning should begin as early as possible.
Certainty vs. uncertainty
Last year, it was difficult to get a head start because it was uncertain whether tax reform legislation would become law, when it would go into effect, and what it would include. This year, the TCJA tax reform legislation is in place, with most of the provisions affecting individuals in effect for 2018–2025. Also, additional tax law changes aren’t expected in 2018. So, early planning is possible.
However, while the tax law is more certain this year and next, it’s still uncertain what affects the TCJA will have on each taxpayer. The new law generally increases some tax breaks and decreases individual tax rates. However, it eliminates or reduces many other breaks.
This year, which tax strategies you will use will be based on the impact these changes will have, such as the best way to time income and expenses. You may need to deviate from strategies that worked for you in previous years and implement some new approaches.
Getting started sooner will keep you from taking actions that you think will save taxes but will instead be costly under the new tax regime. Starting sooner will also help you to take full advantage of the new tax-saving opportunities.
Now and throughout the year
Contact us to get started on your 2018 tax planning. We can help you determine how the TCJA affects you and what strategies you should implement now and throughout the year to lessen your tax liability.
© 2018 https://www.brscpa.com/
Ben R Shull CPA LLC provides clients with tax, transaction, and advisory services. The insights and quality services we deliver help lead our clients through the next generation of changes, and accelerate growth while reducing risk. CPA Katy, TX.