Year-End Tax Planning Checklist for Individuals


Quick Links to Specific Year-End Tax Planning Strategies & Checklists:

–    Year-End Tax Planning & Strategies Overview
–    Year-End Tax Planning – What’s New for 2017
   Year-End Tax Planning Checklist for Individuals       <– YOU ARE ON THIS PAGE
–    Year-End Tax Planning Checklist for Businesses
–    Year-End Checklist for Payroll & 1099 Reporting


Year-End Tax Planning Checklist for Individuals

Wages –

 If your employer provides flexible spending accounts, sign up before December 31st.  Also take advantage of tax-deferred retirement accounts (i.e. Company-sponsored 401(k) plans).  Consider contributing the maximum allowed to defer income into the future.

 If you are required to make quarterly estimated tax payments and haven’t paid them on time, consider increasing payroll withholding on your final 2017 paycheck to reduce or eliminate the late payment penalty.

Itemized Deductions –

 Consider year-end charitable gifts.  Note that there are extra tax benefits to giving appreciated property (i.e.   stock or property).  Call if you may be interested in this.  Remember to donate your clothing and household items to a charitable organization since “non-cash” contributions are deductible if you itemize. If you are 70 1/2 or older, consider making your donations directly from your IRA (discussed more in the “Retirement” section below).

  If you itemize (Schedule A), pay estimated State income taxes this year (by December 31, 2017).  Although State income taxes are itemized on Schedule A, they are also an AMT item and the benefits to this strategy may be limited.

 Apply bunching strategy to Schedule “A” itemized deductions to increase deductible amounts (especially if you are close to the standard deduction amount or to any of the AGI limitation floors, i.e. 10% of AGI for medical expenses, 2% of AGI for miscellaneous deductions). Note that the AGI medical expenses limitation is increased from 7.5% to 10% in 2017 for must taxpayers, but remains 7.5% for taxpayers over age 65.

ObamaCare –

Plan for the impact of ObamaCare (Affordable HealthCare Act). Individuals were required to have health insurance beginning in January, 2014. If you do not have qualified coverage, anticipate and plan for potential penalties. For 2017, the penalty will be the greater of $695 per adult and one-half this amount for dependents under age 18, or 2.5% of household income.

Retirement –

 If you are 70 1/2 or older, be sure to take the “required minimum distribution” (RMD) from your IRA accounts by December 31st to avoid the 50% tax on the amount not withdrawn.

√  If you are 70 1/2 or older, make donations directly to a qualified charity from your IRA.  The donation amount will count towards your RMD, but up to $100,000 will be excluded from taxable income. By reducing income, you’ve essentially received the impact of a charitable deduction. If you are able to itemize (Schedule A), the results may be the same* as if receiving IRA distributions and then making charitable contributions, however if you are not able to itemize, this strategy will reduce income and taxes.

* There are other taxable benefits to reducing your total taxable income.

√  Consider converting any traditional IRAs into Roth IRAs. Traditional IRA accounts will be subject to income taxes when they are withdrawn, whereas proceeds from Roth IRA accounts are not subject to income tax. This type of conversion will result in taxable income on the taxpayer’s current year’s income tax return. If you have low income in 2017 (or have a loss), this is an important strategy to consider.

 Consider contributing the maximum amount into a Company-sponsored tax-deferred retirement account   (i.e. 401 (k) plan). Check to see if your employer will allow you to “catch up” for the current year.

 Note that you have until April 15th, 2018 to contribute to your traditional IRAs for 2017, and that the maximum amount is $5,500 with an additional $1,000 “Catch-Up” amount for taxpayers age 50 or older.  If you can participate in an employer retirement plan, your AGI may not allow an IRA deduction.

Investments –

  Sell stocks to realize losses on stock while substantially preserving investment position (capital losses in excess of capital gains of more than $3,000 can be claimed in later years), or defer gain on stocks with a short sale to be closed early 2017, subject to restrictions imposed by the constructive sale rules.

 Sell stocks to realize gains on stock to off-set excess capital losses you may have.  You can only take $3,000 of capital losses in excess of capital gains in any year; any additional “excess capital losses” will be carried into future years.

  Sell stocks to take advantage of the zero percent capital gains rate. The provision for the two lowest income-tax brackets to pay nothing on long-term capital gains remains for 2017. This zero capital gains rate applies to the following “Taxable Incomes”: $37,450 or less for individuals, and $74,900 or less for married couples.

  Sell stocks at a loss to off set excess capital gains and to avoid the higher income tax rates. The capital gains rate increases by 5% for the top income brackets (“Taxable Incomes”: $413,200 or more for individuals, and $464,850 or more for married couples). In addition, Obamacare added a new Medicare surtax for high-income earners. This 3.8% surtax applies to net investment income for taxpayers with AGI over $200,000 (single filers) or $250,000 (married filing jointly).

Businesses (including Farms & Rentals) –

 Dispose of passive activity to free up suspended losses (i.e. When you sell a rental property, any related suspended passive losses that have been accumulated will be used in the calculation of the property’s gain or loss).

  Year-end checklist for businesses – Review the separate year-end checklist for businesses.


Circular 230 Disclosure: This is to advise you that, unless expressly stated, nothing in this communication (including any attachment or other accompanying materials) was intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding any federal tax penalties, or for promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to anyone.

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