Tax planning we’re doing for our clients right now at end of 2017

Speculation continues regarding tax code changes Congress is now considering.

Regardless of the outcome, there’s still plenty of tax planning work for us to do at Alpha Financial.


• Whether to take any IRA distributions this year to roll over into a Roth since our client has earned income this year in semi-retirement.

• When to start Social Security retirement benefits. After RMD’s start at age 70, our client will be pushed into a higher tax bracket. That means we might take some distributions before age 70, and our tax rate on those distributions will be lower if we wait until age 70 to begin Social Security retirement benefits. Taxes, life expectancy, risk, and expected investment return are all part of the Social Security decision.

• Whether to take some gains on a taxable stock portfolio this year in order to pay down a mortgage. The science of it is calculating the gains. The art of it is to determine how much of the home equity to consider as part of the “bond” part of our client’s asset allocation. Paying down the mortgage does provide a bond return (the after-tax mortgage rate is higher than bond rates right now).

• Whether to surrender a poorly performing annuity the client already had. There are some gains in the annuity. The client will be filing SINGLE next year, so we would pay more gains next year. The client also has quite a bit of other gains pending in rental properties, so we want to schedule the gains over multiple years.

• How much expense to incur in 2017 vs. 2018 for businesses that may have an opportunity to pay a lower tax rate next year if the “pass through” S-Corporation tax rate is lowered.

• Adjustments to W-4 withholding through the end of the year so we reduce our expected refund. We don’t want our clients to have large refunds delayed by any possible identity theft fiasco the IRS or Equifax hasn’t warned us about yet.

Much depends on the tax changes for next year. We’re guessing most of the proposed tax code changes won’t be enacted, but want to at least consider the effect of each change in case it passes.

Let us know if we can work through some of these scenarios for you or your tax projections.

Alpha Financial Management, with offices in Alpharetta and Savannah, Georgia, is a comprehensive wealth management firm which works in concert with tax and estate attorneys to optimize wealth transfer and income tax strategies.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s