New tax legislation has been a looming possibly for the majority of 2017, with some new plans even coming to a vote in the latter part of the year. Nevertheless, taxpayers should focus their year-end tax planning around current legislation, since the proposals may undergo major changes before anything is passed. Below are seven key tax strategies that could lower your tax bill and boost your finances regardless of Congress’ decision.

1. Review your withholding
   Evaluate the amounts withheld from your paycheck as this could help you avoid a larger tax bill in the spring. Several types of taxpayers often discover they are not withholding enough: those with a second job, those who owe estimated taxes (and potentially missed a payment), those who sold large assets with gains, and those who began Social Security or pension payments.
    
   The IRS website has a withholding calculator to help taxpayers verify the correct withholding amount. If yours is incorrect, you may still adjust by updating your form W-4 with your employer.
    
2. Take advantage of taxable losses and gains
   If your investments took a hit this year, you may deduct the losses up to the amount of capital gains, plus $3,000. You can even roll over a surplus of losses to claims for future years if your losses exceeded the annual limit.
    
   Taxpayers in the two lowest income tax brackets under current law (10% and 15%), you could qualify for a zero tax rate on investments with long-term capital gains. One way to receive a zero-tax capital gain is by selling a low-cost-basis long-term investment. You could then acquire it back at a higher cost basis, perhaps lowering your future taxes as long as that acquisition does not vault you up to a higher tax bracket.
    
3. Max out contributions to tax-sheltered savings
   Whether you have a 401(k), health savings account (HSA), IRA or Roth IRA, you should be contributing the max amount. In 2017, HSA contributions for a single person are maxed out at $3,400, and $6,750 for families; IRA’s max out at $5,500 in annual contributions ($6,500 for those 50 or older).
    
   Taxpayers can contribute up to $18,000 in 401(k)’s annually, but according to research, only 10% reached that cap in 2016. If you are contributing pre-tax funds to any of these accounts, there may be less money in your wallet now, but it will mean a lower tax bill come April.
    
4. Meet your medical deduction threshold
   Our current tax legislation permits medical expenses in excess of 10% of your adjusted gross income to be deducted. However, only about 6% of filers usually claim the deduction, which could be why it’s repeal has been widely discussed under the new tax legislation.
    
   This deduction can be an essential tax benefit, so if you’re close to the threshold, determine ways to accelerate your medical spending before the year ends. This spending could include purchasing vital medical equipment or scheduling procedures and appointments before December 31.
    
5. Give to charity
   Expanding charitable contributions is always a savvy, and generous, method of lowering your tax bill. Rather than simply writing a check, taxpayers can also donate highly appreciated stock by transferring ownership of your stock to the charity. If you qualify, the deduction will be based on the market price of the donated stock and you will not owe capital taxes on its appreciation.
    
   Another alternative is putting money or investments in a donor-advised fund, which allows taxpayers to extend charitable donations throughout future years and allows an itemized deduction to be taken for the amount transferred into the account this year. If you are older than 70 ½, you can donate to a charity through your IRA as well, reducing  the taxes on your required withdrawals.
    
6. Take any required distributions
   As noted, once you reach 70 ½, most qualified accounts (401(k)’s, IRA’s, etc.) have required minimum withdrawals (RMD), which is taxed as ordinary income. For those withdrawing their first RMD, there is a grace period until April 1st of the following year, however, every other year’s RMD must be withdrawn by December 31st of that year.
    
   If you do not withdraw the RMD in time, you will still owe the taxes you would have paid and add a cost penalty, which is half of the amount you were required to withdraw. Many financial institutions have RMD calculators so eligible taxpayers can determine the amount of their required withdrawal.
    
7. Take tax planning deductions
   One beneficial tax deduction is for investment advice and tax planning. Discussions have been had around modifying this deduction in the new legislation, but current law permits taxpayers to take deductions for items such as fees paid to financial planners or accountants or the cost of tax software like TurboTax, so whether you do your own taxes or typically seek help, make sure you are taking advantage of this deduction.
    

How our tax code will look in 2018 is not evident at this point, but taxpayers can still make changes in the next few weeks under the current legislation to alter their spring tax bill. This time of year is undeniably busy with the holidays and gatherings, but taking time out of your schedule now to make beneficial tax moves for your future could mean a less stressful spring, and possibly a few more dollars in your pocket.

If you have any questions, please contact me at [email protected].