Are you planning to purchase a vehicle in the near future? If so, consider the potential tax deductibility of up to $10,000 of interest for new vehicles assembled in the United States, but be mindful that eligibility phases out starting at $100,000 MAGI (single) and $200,000 MAGI (MFJ). Are you planning to purchase (or do you currently have) health insurance through the Marketplace? If so, be mindful of the Premium Tax Credit’s sensitive MAGI “cliff” at 400% of the federal poverty level (FPL), since even a small increase in income could disqualify you from the entire credit and require repayment at tax time. Make sure you accurately report your expected income, and consider MAGI-reduction strategies (e.g., retirement plan or HSA/FSA contributions, tax-free income sources, etc.) if you expect your income may approach or exceed the limit. Do you have a significant amount of incentive stock options (ISOs)? If so, be mindful of how the changes to the Alternative Minimum Tax (AMT) may impact your situation, and whether it makes sense to accelerate any ISO exercises (while in favorable AMT thresholds). Are you in the 37% tax bracket, and do you typically itemize deductions? If so, be mindful that the effective tax benefit for those deductions will be reduced from 37% to 35%. Do you anticipate receiving a larger tax refund in light of any new or expanded tax deductions or credits? If so, consider decreasing the tax withholdings from your income sources (e.g., wages, Social Security benefits, IRA distributions, etc.) to help free up additional cash flow for use throughout the year. Are you eligible to make pre-tax retirement contributions? If so, consider the benefits of decreasing your MAGI to maximize eligibility for new deductions, including the expanded SALT deduction, child tax credit, senior deduction, overtime/tip deductions, and car loan interest deduction. Are you or your spouse age 65 or older? If so, consider whether the new senior deduction ($6,000 per eligible person) could make other tax planning strategies (e.g., Roth conversions, capital gain harvesting, etc.) more attractive, but be mindful that eligibility begins to phase out at $75,000 MAGI (single) and $150,000 MAGI (MFJ). Are you charitably inclined and taking the standard deduction? If so, consider whether the non-itemized below-the- line charitable deduction of up to $1,000 ($2,000 MFJ) could complement your tax planning and charitable giving goals and incentivize you to donate. Be mindful that you can’t utilize this donation if you choose to itemize deductions in a given year (i.e., no double-dipping). Are you charitably inclined and itemizing your deductions? If so, be mindful of the new 0.5% AGI floor to deduct charitable giving (when itemizing), and consider strategies to maximize your deduction in excess of the floor (e.g., bunching multiple years of donations, utilizing a donor-advised fund, etc.). Do you live in (or plan to move to) a state with high state and local taxes (SALT)? If so, be sure to factor in the increased $40,400 SALT cap deduction into your tax planning strategies. This may make certain tax strategies (e.g., Roth conversions, harvesting capital gains, etc.) more attractive, but be mindful that eligibility begins to phase out at $505,000 MAGI (single and MFJ). Do you earn a portion of your income from tips and/or overtime pay? If so, double-check that your income from tips and/or overtime is being properly documented and reported by your employer, as you may be eligible for a new tax deduction against income from tips and/or overtime (subject to limitations). Be mindful that eligibility phases out starting at $150,000 MAGI (single) and $300,000 MAGI (MFJ). Are you planning to purchase a home with a down payment that’s less than 20%? If so, make sure to factor in the tax deductibility of PMI when evaluating your choices, but be mindful that eligibility phases out starting at $100,000 MAGI (single and MFJ). (continue on next column) TAX PLANNING ISSUES YES NO TAX PLANNING ISSUES (CONTINUED) YES NO
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