12 Year-End Financial Moves to Make Ahead of Proposed Tax Changes


CFP Board Ambassador outlines some popular deductions that could disappear,

and how to make the most of them while they still exist

Livonia, Mich., Dec. 6, 2017 – As Americans begin their year-end financial planning, says CFP Board Ambassador Robert Schmansky, CFP®, the main message is clear: Americans should use tax deductions that exist now, because many are slated to disappear on Dec. 31 under a rewritten tax code.

“No matter what changes happen with the new tax code, we can be sure it will continue to be an important and confusing piece of personal planning,” said Schmansky. “While we do not have perfect clarity for 2018, here are a few items to consider before year end.”

About a third of all Americans itemize deductions. Among the deductions slated to disappear under the Trump Administration are the deduction for state and local taxes, deductions for medical and dental expenses, some deductions available to homeowners and a host of smaller deductions, such as for job-hunting and alimony. Congress aims to finalize changes by Christmas.

Americans who fail to act at the end of this year may lose thousands of dollars in possible deductions, according to CFP Board Ambassador Schmansky, CFP®. In the latest contribution to LetsMakeaPlan.org, CFP Board offers a list of 12 year-end financial moves and four changes Americans should be aware of stemming from changes to the tax code under the Trump Administration.

1) This could be the last year that you will be able to deduct all state and local taxes (SALT), medical and dental deductions (must exceed 10 percent of AGI for those under age 65, 7.5 percent for those above); and miscellaneous deductions, like the write-off of tax-prep fees, job-hunting and business car expenses, and professional dues, if they totaled more than two percent of AGI. Try to bunch expenses before the end of the year, so that you can take as many deductions as possible.

2) Deductions for property taxes over $10,000 may disappear and the mortgage interest deduction may be limited to debt under $500,000 when the dust settles. Homeowners can consider pre-paying taxes or making January’s mortgage payment in December.

3) A tax change that could go into effect next year forces investors to sell stocks on a first-in, first-out basis. That makes it harder for investors to sell losers in taxable accounts to offset gains. If you want to take advantage this year, you can sell losing stocks this year according to some specific rules. If you have more losses than gains, you can deduct up to $3,000 against ordinary income; and if you have more than $3,000, you can carry over that amount to future years. If you’re going to sell something and replace it within 30 days, the new asset can’t be “substantially identical,” which is known as the wash sale rule. Avoid it by waiting 31 days and repurchase what you sold, or replace it with something that’s close, but not the same as the one you sold.

4) Another possible tax change lowers the tax on income flowing through some kinds of small businesses and solo enterprises. If you are self-employed, consider waiting until January to invoice for some work. The change also means contributions you make to a small business retirement plan this year are even more valuable than usual. If you open a qualified retirement account by Dec. 31, you have until the day you file your taxes next year, including extensions, to make this year's contribution. One plan to consider is the solo or one-participant 401(k) plan, which allows total contributions of up to $54,000 for 2017.

A CERTIFIED FINANCIAL PLANNER™ professional can help Americans plan their year-end financial strategies in an unusually tumultuous year.

ABOUT CFP BOARD The mission of Certified Financial Planner Board of Standards, Inc. is to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning. The Board of Directors, in furthering CFP Board’s mission, acts on behalf of the public, CFP® professionals and other stakeholders. CFP Board owns the certification marks CFP®, Certified Financial Planner™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements. CFP Board currently authorizes nearly 80,000 individuals to use these marks in the U.S.

CONTACT: Jessica Lewis, Communications Specialist P: 202-379-2256 E:jlewis@cfpboard.org Twitter: @cfpboardmedia

ABOUT ROBERT SCHMANSKY, CFP®

Robert Schmansky is the founder of Clear Financial Advisors of Metro-Detroit and Ann Arbor. Rob has over a decade of experience helping individuals and families meet their financial goals and overcome money concerns. He is frequently quoted in the media on issues regarding personal financial planning, and has been a contributing writer for U.S. News & World Report, Forbes, Investopedia, and Yahoo!Finance, and an investment expert for FiLife, a former Dow Jones/IAC joint Internet venture. He has been an adjunct instructor of economics and the required courses for candidates to sit for the CFP® exam. Rob was named a Top 100 Most Influential Advisor by Investopedia, 40 Under 40 financial planning professional by InvestmentNews, and he is the 2013 PlanPlus Global Financial Planning Awards North American finalist.

CONTACT: Robert Schmansky, CFP® P: 248-677-1762 E: rob@clearfinancial.net W: www.clear.financial Twitter: @moneyclarity

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