Q&A: What end-of-year planning should I be doing?

by | Nov 30, 2017

Time is running out this calendar year to take action on important items that need to be addressed before the end of the year. But, there is still time to make some last-minute adjustments before we get to 2018. Here are just a few year-end tips that could help you as we wrap up 2017.

Take inventory of total income from 2017

By evaluating your income level for the year, you should be able to at least get a starting point for what your tax liability will be for the year. Was your income similar in 2017 to what it was in 2016? This is a great exercise to do in conjunction with your accountant, and we would advise you to seek specific tax advice from a tax professional!

Take inventory of expenditures from 2017 and create budget for 2018

Although tedious, tracking expenses can be beneficial in several ways. First, seeing where every dollar is spent tends to raise awareness of spending patterns and can help reduce total expenditures in the future. Secondly, it helps us (your advisor) as we create and monitor your retirement plan by having accurate expense assumptions. Accurate assumptions should lead to more confidence and clarity in your financial plan.

Identify transactions that could improve tax situation for 2017*

If 2017 was a year where your income was higher than normal, or perhaps you had fewer deductions than in previous years, it might be a good year to explore what other options you have to reduce your tax liability. Some common and prudent actions to take could include; contributing to your Health Savings Account (HSA), contributing to your 401(k) or IRA (excluding Roth IRAs), or even making a charitable contribution. If done before December 31st, each of these actions can reduce your tax bill for 2017.

Identify opportunities for minimizing taxes for future years*

While reducing taxes in the current year is great, you may have opportunities to proactively reduce taxes for future years as well. This may be prudent if you have a low amount of taxable income for the year. If this is the case, you may have room to increase your taxable income in the current year without significantly increasing your tax liability. Here are just a few ways to do so:
– Taking capital gains in this year (capital gains are currently not taxed if your tax rate falls below the 25% tax bracket)
– Performing a Roth IRA conversion
– Taking proper RMDs (to avoid future penalties)
– Taking IRA distributions before they are required (if you’re at a lower tax rate this year compared to future years)

If self-employed, identify if you should establish a new or different retirement plan

If your business is producing increased revenue, you may be looking for ways to save more money on tax-deferred basis. Different types of retirement plans allow for different contribution limits. It is common for small businesses to begin with a SEP or SIMPLE IRA for their minimal maintenance requirements, but other retirement plans can allow for higher contribution limits. Choosing the right retirement plan can help significantly reduce taxes and increase savings over a period of time. To access our guide on how to choose the best retirement plan for your small business, click here.

Review health insurance plan for 2018, and shop for new plans if needed

The ACA open enrollment deadline is December 15th. This is the time to review your health insurance plan and see if it is still best for you for the year 2018. Do you expect your medical expenses to go up next year? If so, then perhaps it is better to ditch the high-deductible plan for one with a lower deductible. Or, perhaps you’d like to explore a high-deductible plan with an HSA option for 2018 if your medical expenses have been low in past years. This is an important part of your plan to review and time is running out to make changes for next year!

Let us help you if any of these topics particularly strike a chord with you, let us guide you through a conversation to see if any action needs to be taken in this year or for future years as well.


*CarsonAllaria Wealth Management does not give tax or legal advice. We recommend that before making any tax planning decisions, you check with a tax professional for specific advice for your situation.

All articles are provided by CarsonAllaria Wealth Management (CAWM or firm) for informational purposes only. By accessing or otherwise using this Article, you agree to be bound by the terms and conditions set forth below. Investing involves the risk of loss and investors should be prepared to bear potential losses. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future. Therefore, it should not be assumed that future performance of any specific security, investment product or investment strategy referenced in the Article, either directly or indirectly, will be profitable or equal to the corresponding indicated performance level(s). No portion of the Article shall be construed as a solicitation to buy or sell any specific security or investment product or to engage in any particular investment strategy. In addition, this Article shall not constitute the provision of personalized investment, tax or legal advice, and investors shall not assume this Article serves as a substitute for personalized individual advice. Information contained in this Article may have been derived from third-party sources that CAWM believes to be reliable; however CAWM does not control such information and does not guarantee the accuracy or timeliness of such information and disclaims all liability for damages resulting from such sources. Links or references to third-party websites are provided as a convenience and do not constitute an endorsement by CAWM, and the Firm is not responsible for the content of any such websites. Any reference to a market index is included for illustrative purposes only, as it is not possible to directly invest in an index. Indices are unmanaged, hypothetical vehicles that serve as market indicators and do not account for the deduction of management fees or transaction costs generally associated with investable products, which otherwise have the effect of reducing the performance of an actual investment portfolio.