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Personal Tax Planning Strategies

Personal Tax Planning Strategies

It is important to properly plan one’s tax responsibility. Like individual taxpayers, the Federal and State governments have experienced financial distress and are becoming more aggressive in collecting taxes. A sound tax plan will help to minimize taxes and avoid surprises. Here are some general tips:

  • Adjust W4 with employer to minimize over/under withholding.
  • For tax year 2017, “Bunch” miscellaneous and medical itemized deductions, if not subject to Alternative Minimum Tax
  • Be aware of Alternative Minimum Tax implications
  • Investment income
    • Hold assets long term to realize favorable tax rates
    • Defer year end sales to following calendar year
    • Increase basis by amount of re-invested dividends and capital gains
    • Defer mutual fund purchases to after distribution date.
  • Use available credits
    • Education
    • Child
    • Adoption
    • Retirement
    • Energy
    • Dependent care
    • Earned income
    • Elderly or disabled
    • Foreign tax credit
  • Utilize Flexible Spending Accounts (FSAs) from employer. Plan carefully as unused contributions are forfeited.
  • If available, utilize Health Savings Accounts (HSAs).
  • Keep accurate records of charitable contributions to maximize deductions.

Your personal circumstances may indicate additional tax savings strategies. Be aware of tax law changes and associated personal impacts of these changes. Consult with your personal tax specialist to accurately plan for future tax responsibilities.