Amid a never ending sea of news topics, there is one that has come to define the 2018 news cycle, at least from an investment standpoint. In January most people people thought the primary theme of the year would be taxes after the major tax reform bill was passed at the end of last year. However, it didn't take long for a new topic to become the primary focus: tariffs.
This June I made my annual pilgrimage to the desert oasis known as Las Vegas for the AICPA ENGAGE conference. This "megaconference" was a merger of many smaller conferences that had historically been held separately throughout the year. The Advanced Financial Planning conference had always been our primary conference but by joining forces we now have the opportunity to attend sessions from other conferences like the Advanced Estate Planning conference and the High-Income Individuals Tax Strategies conferences. In short, the best minds in the accounting and financial planning professions were all there and I'm still trying to make sense of everything I learned.
Summer is here and if you're like me you could probably use some fresh reading material for your upcoming vacation. Rather than give you yet another book list I thought I'd provide a roundup of some of the best articles I've read recently. I recommend saving these to Pocket (my personal favorite) or Instapaper so you can read them from your tablet or phone wherever you might go on your travels this summer.
The 2017 Tax Cuts and Jobs Act (TCJA) changed the landscape of planning for individuals, business owners, estates, and trusts. Tax planning has now become very individualized, everyone’s situation is unique and many of the past rules no longer apply. Multi-year planning is also now a must. With the opportunity for income/deduction “bunching,” an important part of planning, it is hard to just look at one year. Sometimes generating income can save taxes in the long run. It is no longer simply a matter of deferring income or accelerating deductions. We also often look at “multi-generational” tax planning. There may be opportunities to shift income to lower bracket parents or children to reduce the overall tax burden for the family.
When Congress passed the Tax Cuts and Jobs Act late in 2017 it was widely covered in the media that high income taxpayers in higher tax states could actually face a tax increase as a result of the bill. The reason for this is the $10k limitation placed by the bill on the deductibility of state income taxes. Prior to the passage of this bill, if you itemized deductions on your Federal return, you were able to take the full amount of the state income and property taxes you paid during the year as a deduction. For a high income taxpayer in a state with high income taxes, this often resulted in a big deduction at the Federal level. There was a lesser reported potential tax increase for many of the same taxpayers in high tax states like Maryland...
Did you owe taxes with your 2017 returns? Did you receive a big refund? Did you have any idea whether you would owe or receive a refund before you sent us (or your CPA) your tax information? Wouldn't it have been nice if you had?