Alfred A Cohen, CPA

Call Now: 732 577 9300

On November 22, 2016 an injunction was issued which enjoined the Dep’t of Labor from implanting the new overtime rules due to become effective December 1, 2016.

During this year, no new tax legislation has been enacted.  At the end of 2015, a bill was passed which made permanent various taxpayer favorable tax extenders.

President-elect Trump declared that a “major tax bill lowering taxes in this country” would be one of his top three priorities. Those middle and upper income taxpayers, who are betting he can deliver on this promise, and put his tax reduction plan in place for 2017, should revisit their year-end tax moves to make the most of what might be savings next year.

The Trump tax plan would feature three tax brackets instead of current law's seven, and a top tax rate of 33% instead of current law's 39.6%. The upshot of these and other tax-reduction changes, if retained in the final tax plan, would be reduced taxes for middle and upper income taxpayers, with the biggest tax savings realized by the wealthiest taxpayers.

The standard year-end tax-savings wisdom always has been to defer income, where possible, into the coming year. This standard approach would make even more sense for middle and upper income taxpayers if the Trump tax plan prevails over others in Congress, and goes into effect for tax year 2017.

Some suggestions to defer income to 2017:

                If possible defer a bonus.

                If possible defer first year required minimum distribution from an IRA or 401K .

                Defer traditional IRA to Roth IRA conversions .

                If medical expenses exceed the 10% AGI floor accelerate any medical procedures and pay in 2016.

Accelerate itemized deductions if you think there will be a lower marginal tax bracket such as contributions, mortgage payments and state and local taxes and real estate taxes( taxes only if not subject to alternate minimum tax)

           

If you think the investment income surtax will be repealed, hold off selling capital assets until 2017.

In 2017, the taxable amount of wages subject to Social Security tax will increase to $ 127,200 from the current $ 118,500. The rate(6.2%) remains the same. No changes were made to the taxability of wages subject to Medicare tax.

 Contact the office if you want to discuss any year-end issues.

 

 

Happy Holidays.

Home Newsletters December, 2016

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52 N. Main St, Marlboro, New Jersey , America

Tel: (732) 577-9300, Mail: info@aaccpa.com