Unless you live under a rock, you are quite aware of the new tax law. Sweeping changes have been made to everything as simple as rate brackets, the standard deduction and personal exemptions, to much more complex aspects of the law. What you may not be aware of is the impact this will have on you and your family.
While the largest corporations and their shareholders clearly got a massive tax cut, it is less clear what has happened to the rest of us. One thing is certain: the reality of the tax law will come home to roost next year at this time, and by then it is much too late to do anything about it.
What to do now?
1. First, find out what is happening specifically in your circumstances with a good tax projection for 2018. Using your 2017 figures, you can see what the new law does to your tax liability this year. Good news or bad, it is likely to be significant.
2. Second, develop a plan to overcome what bad impacts you have (loss of personal exemptions, loss of most itemized deductions, reduced deductibility of interest expense, loss of state and local tax deductions over $10,000 and so on). In some cases you can restructure and refinance to mitigate some of these bad impacts. Time, however, is not on your side. The sooner you do things in 2018, the greater the impact for this year.
3. Once the easy stuff (?) is managed, determine if restructuring various income assets and business interests might make a difference. The new tax law makes some artificial changes in rate brackets, and in some cases you can make changes to qualify for the breaks. In most cases, standing still will probably be a mistake.
4. Finally, do not forget your estate plan. A large increase in tax exemptions, however temporary it might be, presents huge opportunities. If gift or estate taxes ever discouraged you from adopting a great strategy to protect and enhance your family’s assets and security, now might be the time to do it.
Give us a call to schedule a time to talk about how we can help you determine your level of exposure and discuss ways to ensure that your tax and estate plans continue to work for you and your family.