It’s Always a Good Time for Tax Planning by Jack Winter, CPA/PFS, CFP

Posted on July 24, 2017 by Jack Winter

Individual and business taxpayers erroneously believe that once they file their returns in April, they can put those documents away in a file cabinet and ignore them until the following year. The fact is that the information contained in an annual tax return can provide an abundance of information about your current financial health and that of your business while also identifying opportunities for building wealth and minimizing future tax liabilities.


Following are five strategies you should consider implementing during any time of the year when you still have time to make measurable improvements to final tax filing on April 15.


Meet with your Accountant

Who knows more about your personal and business finances than your accountant? Not only are these professionals qualified to prepare your tax returns, they are also seasoned advisors with skills required to read between the lines of tax returns and financial statements to identify potential weaknesses that prevent you from reaching your financial goals or optimizing business profits. By meeting with accountants throughout the year, rather than limiting communication to tax season, you may receive guidance needed to implement appropriate strategies to overcome these barriers and achieve tax efficiency.


Get a Mid-Year Tax Check-Up

Individuals and businesses that pay estimated taxes throughout the year should the time to determine if their payments are on target. Tax underpayments may result in significant penalties, whereas overpayments or having too much withheld from one’s paycheck may result in a tax refund come April. The problem with overpaying taxes, however, is that it is essentially an interest-free, short-term loan that you give away to the government. This may leave you short of funds to pay for a surprise emergency, such as a car repair, or it may limit your ability to invest in the public equity market and allow your money to work for you.


Get Organized

The slower summer months are a good time to organize your tax documents and make sure that you have copies of the estimated taxes you already paid as well as receipts to support claims for charitable donations, business expenses and other outlays of money that may be tax deductible.


Consider how Changes in Life or Business Impact your Tax Liabilities and Estate Plans

If you recently got married, became a widow, had a child or moved to another state or country, you can expect a change in your tax liabilities. For example, a marriage or death of a spouse will change your tax-filing status and the amount of taxes you will owe, whereas the birth of a child may require you to change the amount of taxes you previously withheld from your pay. A move across state lines may increase or decrease your income taxes, depending on where you move, and may also expose you and your heirs to state-level estate taxes. Each of these situations should also trigger you to update your records with the IRS and Social Security Administration and to review your estate plan and ensure your named beneficiaries reflect life-changing events and to identify opportunities to reduce your potential tax liabilities in the future.


For business owners, there is a broad range of situations that can impact your tax efficiency as well. As an example, if your business purchased new equipment in 2017, you may be eligible to deduct up to $510,000 of those acquisition costs in the current year rather than depreciating those assets over a period of time. The amount you deduct will be reduced, dollar-for-dollar, by each qualifying Section 179 property exceeding $2.030 million that you put into place during the tax year. In addition, qualifying businesses may be able to claim the added benefit of a 50 percent first-year bonus depreciation on “qualified property” they purchase and put into service in 2017. That’s quite a buying incentive, especially when considering that the amount of first-year depreciation will be gradually reduced in the future to 40 percent in 2018, and 30 percent in 2019.


If you start a new business in 2017, you may be able to deduct up to $5,000 in qualifying startup expenses you paid for items such as advertising, travel, training, and legal and accounting fees. Additionally, certain startup businesses with qualifying research and development (R&D) expenses may be able to apply up to $250,000 of their annual R&D credits against their payroll tax liabilities.


Think about Retirement

Individual taxpayers have an opportunity to contribute up to $18,000 to an employer-sponsored 401(k) retirement plan in 2017 and benefit from future years of compounding interest. At the minimum, taxpayers should contribute the amount offered by an employer match, which can be likened to free money. Taxpayers who do not have access to a 401(k), may still reap tax benefits and save for the future when they establish and contribute a maximum of $5,500 in 2017 to an Individual Retirement Account (IRA) or Roth IRA.


Businesses that establish retirement savings plans for themselves and their employees can gain a significant competitive advantage when recruiting workers who understand the value of retirement readiness. In addition, not only may you receive tax credits and other incentives to help the business pay for the costs of establishing a retirement savings program, but you may also deduct the amount you contribute to worker’s plans as an employer match.


Tax planning doesn’t have to end in April. In fact, there is a multiple of opportunities throughout the year when individuals and businesses can benefit from tax-consulting services intended to build wealth, optimize business profitability and comply with domestic and international regulations, all while maintaining tax efficiency.


About the Author: Jack Winter, CPA/PFS, CFP, is an associate director with the Tax Service practice of Berkowitz Pollack Brant, where he works with individual taxpayers and entrepreneurs on estate planning, tax structuring and business consulting.  He can be reached at the CPA firm’s Ft. Lauderdale, Fla., office at (954) 712-7000 or via email at