As Congress grapples with the most sweeping tax overhaul effort in decades, investors have many questions: How will this affect me? What should I do now? Well, we’ve got answers.
WHAT SHOULD INVESTORS DO TO PREPARE FOR THE NEW TAX RULES?
In general, investors should not make significant changes to their investments or financial plans right now especially if you have a long-term investment strategy and financial plan.
WHAT EFFECT WOULD NEW TAX LEGISLATION HAVE ON OUR 2017 OR FUTURE TAX LIABILITY?
- 2017 status quo. If passed, it’s unlikely that anything in the tax bill will have a significant effect on your 2017 tax return.
- 2018 tax relief. Many independent think tanks estimate that the House and Senate bills would provide a net benefit to most taxpayers.
SHOULD WE TRY TO SHIFT INCOME OR DEDUCTIONS BETWEEN 2017 AND 2018?
There is no guarantee that a final tax bill will be passed into law, so making decisions based on the current proposals could be risky. Some ideas:
- Medical Expenses: You might try to pull medical expenses into this year if you fear losing the deduction. (Senate bill continues to allow the deduction for medical expenses; The House bill eliminates the deduction for medical expenses).
- Charitable Giving: Both tax bills would allow a deduction for charitable giving—but with the potential loss of many itemized deductions, some people may decide to use the standard deduction. Giving to others is always a good thing.
SHOULD WE TALK TO A TAX PROFESSIONAL BEFORE YEAR END TO PREPARE FOR THESE CHANGES?
It’s always a good idea to meet with your tax advisor—not just to talk about the potential impact of the tax bills, but to discuss your tax situation and circumstances and your plans for the coming year.
