By now, you’ve heard that Congress is considering significant changes to our tax code with the Tax Cuts and Jobs Act of 2017. While it recently passed the House, the Senate still has to vote on their version, and from there both Chambers of Congress will negotiate their differences via a Conference Committee. We cannot be certain that this tax act will actually pass, nor when it may pass. However, there are some strong indications that a significant tax law change will happen.
What does this mean to you? The tax law uncertainty complicates timing strategies. Determining the right timing strategies in 2017 is especially challenging because changes as proposed could potentially affect both your income tax rate and what you can deduct. The changes will most likely impact 2018 and beyond, but could create lost opportunities if not taken advantage of with your 2017 tax planning.
All indications are that certain deductions will be eliminated or greatly reduced. In that case, you may need to accelerate them into 2017. Alternatively, there may be some generous cost recovery on new business assets available in 2017, which may immediately help you reduce your current taxes.
What do we recommend? We are uncertain of what the final Tax Cuts and Jobs Act will contain. However, based on what we have observed, we know that there will likely be some action required before December 31, 2017 to minimize your overall tax liability for multiple years. At this time, we recommend a staging approach. First, your specific tax situation should be reviewed immediately so that we can evaluate what last minute options there may be, and for you to plan your cash flow accordingly. Secondly, as soon as the tax law actually passes, we will decide whether it will be to your advantage to execute the planned tax mitigation options based on the final law.
Time is of the essence. We anticipate that there will be a slim time frame between when the final legislation passes and December 31, 2017. Call or email me at your earliest convenience so we can avoid missing an opportunity. Let’s discuss what your unique timing tax strategy options may be and save you some of your own money.