Dissatisfied with your tax outcome? The best available time to plan for next year is right now.

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It’s been said that the best time to plan for tomorrow is last year. And for many, despite the best of intentions and plans in place, the first tax season in the wake of the Tax Cuts and Jobs Act of 2017 turned into a surprise, positive for some, and less than positive for others. 

“We’ve all seen the headlines about how many came away surprised by the effects of tax reform. Some were surprised positively, and others may have experienced effects outside of their goals,” said Elizabeth Muñoz, MBA, AIF®, and Retirement Plan Advisor at Regency Investment Advisors. “While the best time to plan might have been last year, the second-best time to plan is right now. For many, plenty of options remain for minimizing the impact of taxes next year.” 

While Regency does not do tax planning — that’s always a job best left to your accountant — we do understand a lot about tax management and the role it plays in reaching your long-term financial goals. With that in mind, we’re aware of several elements that can have a positive effect on your tax picture for next year, including the following: 

Retirement savings can present opportunities 

If you’re covered by a 401(k) or another company-sponsored retirement plan, consider increasing your contributions in 2019 to reduce your taxable income. “Tax reform increased contribution limits on company-sponsored retirement plans, to $19,000 annually for individuals and $25,000 annually for those over 50,” Elizabeth said. “Also, boosting your IRA contribution to the full $6,000 annually for individuals can reduce your tax bill next April.” 

Reconsider your current tax withholding 

Many taxpayers have a habit of over-withholding, presuming they will receive a larger refund during the next year if they do so. But for some, that anticipated refund did not materialize, and for others, they incurred a tax bill anyway. “Tax reform brought about major changes in tax rates, standard deductions, and personal exemptions. For many, the old assumptions about refunds simply no longer apply,” Elizabeth said. “Now may be a good time to reconsider your withholding. Don’t over-withhold, and instead consider putting that money to work for you in the here and now.” 

Give strategically 

For many, the higher standardized deductions of tax reform affected the deductibility of their past charitable contributions. Under tax reform, it may be worth considering new strategies to maximize both the benefit to the charity and the benefit to your tax picture. 

“We’re aware of several strategies that allow investors to donate strategically, to continue the giving that’s so important to the causes they support while taking advantage of deductibility,” Elizabeth said. “Strategies like ‘bunching,’ which under certain circumstances, allows donors to bunch two or more years’ charitable giving into a single tax year. Or use of Donor Advised Funds, which may allow an investor to qualify for an immediate tax deduction and then recommend grants from the fund over time.” 

The one constant throughout all of this? “Change, of course,” Elizabeth said. “Change requires adaptability, and adaptability requires a combination of excellent planning and flexibility. Helping our clients adapt to change, and maximizing the opportunities available are the reasons we’re here. And we’re only too happy to help our clients navigate change.” 

Have questions about how these and other strategies could help you maximize the benefits of tax reform? Call your Regency advisor at 438-2640 today.

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