Whether you are a business owner or an employee, now is a good time to begin thinking about tax-efficient planning to maximize your after-tax income.

Year-end planning for 2019 takes place against the backdrop of recent major changes in the rules for individuals and businesses.  Although the tax law changes were intended to simplify the federal tax system, the opposite is true. The complexity of this sweeping overhaul requires thoughtful planning.  For individuals, these changes include lower income tax rates, an increased standard deduction, and the elimination of certain other deductions.  For businesses, the corporate tax rate has been reduced, corporate AMT has been eliminated, and there are new limits on interest deductions.  Also, non-corporate taxpayers with qualified business income may be entitled to a special deduction.

Despite these major changes, the time-tested tactics of deferring income and accelerating deductions can still produce favorable results for many taxpayers.

As you develop your plan, keep in mind the following:

• Do I understand the 3.8% surtax and the 0.9% additional Medicare tax, including how to minimize or eliminate these taxes?
• What is my strategy for the sale of a capital gains item?
• How does postponing income until 2020 and accelerating deductions into 2019 impact tax credits and other tax deductions?
• When is accelerating income into 2019 the right answer?
• Does the tactic of bundling charitable contributions make sense for me?
• Is now the right time for a Roth IRA conversion?
• Do I need to take required minimum distributions (RMDs) from my IRA or other retirement plans?
• Have I properly adjusted my withholding?
• Does the 20% qualified business income deduction apply to me? If so, how can I maximize the deduction?
• Can my business take advantage of the increased depreciation and expensing limitations?
• Do I have suspended losses that I can deduct?

The above are just a few of the questions that should be considered when thinking through planning strategies.  The opportunities can be significant, and I urge you to explore the possibilities in order to maximize the tax strategies available to you.  Taking no action now can be costly. Please let us know if we can help.

With deadlines for decisions and filing your 2019 tax return quickly approaching, don’t hesitate to contact me today at skenworthy@mercadien.com or 609-689-9700.