Broker Check


The Tax Reform Windfall - Don't Let it Slip Through Your Fingers

| March 12, 2018

2018 is shaping up to offer some historical opportunities for anyone’s planning. Whether you simply pay a lot in income taxes, own a business and have more complex tax issues, or want to protect your estate from Uncle Sam, now is the time to plan for anything and everything. A little known fact is that most of the recent tax reform has an expiration date in the near future, and there was very little effort to fight the ability for lawmakers to create claw backs. This means the statute of limitations law is critical and the clock is ticking.

Now that you are sold on the idea of planning, let’s talk strategy. As we go through the year, we will be releasing some of the best ideas we come across. To start, here are three of the best so far:

#1 Give more, be taxed less now and forever…There is a saying that you die twice. The first time is when you physically die. The second time is when you are forgotten. This won’t be the case at least one inspired lady. With a little planning, we found a way for her to increase the value of her estate by another 50% overnight, create a family foundation which would continue to support her philanthropic work long after she is gone rather than a single gift. Simultaneously, she created a partially tax-free legacy for herself and her heirs. All of this was done courtesy of Uncle Sam.

#2 Will taxes kill your retirement plan…It is easy to think about the here and the now. Everyone wants to pay as little tax as they can, but have you ever thought about the long-term cost of deferring everything you can into a retirement plan. We call this the ticking tax bomb. Too many retirees end up with a FULLY TAXABLE RETIREMENT. Worse, tax economics tells us tax rates won’t be lower; they will be higher in the future. Can you imagine paying more taxes in retirement than you do now? We are utilizing tax reform to change the future and make part of retirement tax-free.

#3 Choose your tax bill…This was a no brainer for one doctor making $750,000 this year. He could either pay $179,169 in income taxes or $37,710 in income taxes. Business owners, especially those who own a services business (health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services and any other trade or business where the principle asset of the business is reputation or skill excluding architects and engineers), may get to choose their tax bill this year with a little planning. Imagine getting to deduct 20% of the profit from your business… or not. It is as simple as that.

We have always struggled to answer precisely what we do when asked. Someone recently provided me with a great answer - You do pre-tax planning, not after-tax planning. We don’t want you to wait until the end of the year or when tax time rolls around and you are visiting with your accountant about what you can do to pay less in taxes. By then it may be too late. Create your windfall today!