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Year End Tax Preparation Tips

As the tax landscape shifts with political maneuvering in Washington, individuals and business owners might be distracted from thinking about their own taxes as the 2017 tax year comes to a close. The tax attorneys at the Baltimore law firm of Rosenberg Martin Greenberg have prepared these year-end tax preparation tips to help everyone get a better focus on the upcoming tax filing season.

A Failure to Prepare is the Equivalent of Preparing to Fail

Tax preparation and procrastination go hand-in-hand. Avoid the urge to procrastinate and collect your records now. Use checklists to verify that you have records of all income and assets, including W-2 and 1099 income, local and state tax refunds from the prior tax year, business, rental, royalty, and dividend income, and any miscellaneous items such as jury pay and gambling winnings.

Shift Income and Increase Deductible Expenses

If your 2017 income is high and you can defer income to 2018, that deferred income might receive more favorable tax treatment. This requires you to take a risk that any new tax laws will result in lowering your marginal tax rate. If you would rather not take this risk, determine whether you can validly incur expenses that will offset your 2017 income, particularly in a business. Consider upgrading equipment, prepaying vendors, or stocking up on office supplies. Be careful not to get tripped by Alternative Minimum Tax (AMT) considerations if you are offsetting income with expenses.

Contribute to Retirement Plans

Retirement plan contributions have been a consistently valuable tax strategy for many years.  Retirement plan strategies can go beyond IRA contributions. Consult with an advisor, for example, about opening a self-directed Roth IRA that can give you a vehicle to make investments that grow tax-free. Depending on your age, you may have an opportunity to make larger retirement plan contributions to shield income from taxes. Your advisors will be able to help you develop a strategy for the best blend of retirement plans that fits your income and asset profile.

Review Quarterly Estimated Tax Payments

Self-employed individuals who make quarterly tax payments should confirm that those payments are adequate to cover at least 90% of their total anticipated tax liabilities for the year. Failure to do so can expose a tax filer to penalties for underpayments, and those penalties will need to be added in a large check that the filer will then write when he or she files 2017 tax returns.

Sell Underperforming Assets

Even though the equities markets are booming, you might still have a few losing positions in your stock portfolio. If you expect to declare significant capital gains on your 2017 tax returns, consider liquidating your money-losing stocks to offset those gains.

Use Up the Money in Your Flexible Spending Accounts

The pre-tax funds that you have deposited into flex plans, such as health savings accounts, might not be available to you after the first of the year. Make sure you are not leaving any balances in those accounts. Schedule medical appointments as needed to deplete those funds.

Schedule an Appointment with Your Tax Attorney Today

Scheduling an appointment with the tax attorneys at Rosenberg Martin Greenberg in Baltimore may well be the smartest move you make as you prepare for the 2017 tax filing season. RMG’s tax attorneys will not only confirm that your tax preparations are in good order, but they will also look to see if you are eligible for any legitimate means to reduce your 2017 tax liabilities. They can also help you set up your income and assets for 2018 and beyond to take maximum advantage of benefits that may be available under any new tax laws that Congress may enact.  Call an RMG tax attorney now, before you take any further steps to close out your tax year.

Additional Resources:

  1. irs.gov: Free Tax Preparation Tips. https://www.irs.com/articles/tax-preparation-tips-2
  2. thebalance.com: 7 Year-End Tax Tips for Small Business. https://www.thebalance.com/year-end-tax-tips-small-business-2951869

Rosenberg Martin Greenberg

25 South Charles Street, 21st Floor MD 21201
Phone: 410-727-6600
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Rosenberg Martin Greenberg

705 Melvin Avenue Annapolis, MD 21401
Phone: 410-727-6600
Map & Directions