Year-End Tax Tips and Other Good Ideas from Atlanta’s Most Trusted Advisors



With an eye to the close of 2016, Bonnie and Stone chatted with a tax planner and a financial planner on the latest episode of Atlanta’s Most Trusted Advisors on Atlanta Business Radio. Their guests were CPA and tax partner Alicyn McCloud of FinLogic and Emily Foulkes, a financial planner with Foulkes-Steele Wealth Management.

The conversation was wide-ranging, and began with a few ideas about last-minute tax options that reflect the theorized changes coming down the pike with a Trump presidency. As far as anyone can guess at this point, the best plan is to accelerate deductions and defer income. That’s based on the assumption that high earners will see a reduction in rates beginning as soon as 2017. If you’re in one of the top brackets it’s probably a good idea to postpone sales of real estate and other transactions that produce significant income, so you can take advantage of likely lower taxes on the amounts generated.

In the same vein, 2016 is probably a good time to harvest tax losses. While rates are still relatively high for top earners, you can minimize the overall tax burden by pruning your portfolio and claiming tax losses for underperforming investments.

Those with higher incomes can also look forward to a general reduction in taxes, such as those related to the Affordable Care Act, that could potentially improve their annual cash flow to a significant degree. For that to happen, however, Congress will have to agree on and pass a tax restructuring along the lines of what president-elect Trump is proposing.

For all earners, reviewing withholdings at the end of the year is a sensible strategy. If you’ve had tax-relevant changes like marriage, divorce, starting a business or becoming self-employed, adjusting withholding rates can be a valuable tool so that you don’t end up owing a large amount at the end of the coming tax year. And of course, if you’re withholding more than necessary, tweaking that amount can result in a nice bump up in monthly income throughout 2017.

Conducting a year-end review of beneficiaries is also wise. Think about wills, retirement plans, investments and other assets that will pass along with you. Do you still want your estate to go to the named beneficiaries? Perhaps more important, are you still comfortable with those you have chosen as guardians of your children if you were to die in 2017?

And speaking of wills, Alicyn and Emma agreed on two critical bits of advice:

  1. Make a will, and have it drawn up by a competent attorney. Yes, it costs a bit more than using Legal Zoom or another do-it-yourself method, but the savings in terms of both money and family harmony make it well worth the initial investment. An unenforceable will creates untold misery for your heirs and expense for your estate.
  2. Consider adding a clause stating that anyone who contests the will is written out of it. As Emma points out succinctly, “So many families break apart because of the will…and that stops a lot of the malarkey.”

For older taxpayers, required minimum distributions (RMDs) from IRAs, 401k’s or other retirement accounts are critical to remember. But if the money is not needed as current income, giving the RMD amount directly to a qualified 501c3 organization is a nice way to support the causes that matter to you while avoiding income tax on the money. Reducing taxable income this way can also help lower insurance premiums and protect Social Security income from becoming taxable.

No matter what your current age, having good numbers and planning ahead will prevent big problems later on. That means working with your financial advisors throughout the year, to adjust plans and take advantage of opportunities as things change. But it also means having difficult conversations with loved ones, both parents and children. Communicating about insurance policies, income and budgets now will make it much easier to understand needs and options when someone else must step into the role of managing finances for any reason, whether age-related or an unexpected disaster.

If a disaster were to occur, would you have access to important legal and financial documents? No one expects a devastating storm or serious house fire, but these calamities do happen. Be sure you keep a copy of all your most critical documents in a fireproof, waterproof lock box. Better yet, have digital copies made and stored securely in the cloud, so that in the event of a disaster you can still navigate the maze of insurance, banking and other tasks that will suddenly loom.

And finally, consider how valuable financial education can be for young and old alike. Many of today’s adults are performing a difficult balancing act as they raise children while looking after parents who may not have been comfortable learning how to manage their own finances, or never had the opportunity to do so. Saving and budgeting are easy lessons for children or beginners. Follow these lessons by a more comprehensive study of investing, long-range planning and financial tools like insurance and annuities. Making finances an area of curiosity and ongoing study can break the cycle of helplessness and create a sense of empowerment.

To listen to the full show, go here. You can make 2017 a wonderful year full of growth, learning and smart financial management with a little planning. Take the opportunity to take control, and have a joyous New Year!

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