As we enter the final quarter of 2017 (yes the last three months of the year are here), I am sure you feel the same way we do and cannot believe how fast this year has gone by. Keep in mind that the year is not going to slow down and there are several things you should be thinking about as the final days of the year pass us.
We are going to provide you with five things that you should review in the next couple of weeks to ensure that you are prepared for 2018 and filing your 2017 tax returns.
1) Take caution before making investments in a non-qualified (or non-retirement) account(s). This time of year mutual funds begin to announce their plans to distribute capital gains to their shareholders. The last thing you want to do is make a significant investment in a mutual fund and then get hit with large capital gains after only owning the fund for a few weeks. Does this mean you should or should not invest in these types of accounts until January 1st? No, you can certainly invest between now and the end of the year, but you must be aware of the potential consequences. In addition, there are strategies that you can use to invest your funds now and avoid these capital gains distributions before the end of the year.
2) Review your non-qualified account mentioned above. Take note of your year-to-date capital gains or losses due to sales of investments over the course of the year. You may want to sell some of the investments that are not performing well in your portfolio (take the loss) to offset gains you currently have in your account year-to-date. Another option may be to take some gains in your account if you have a net loss for the year thus far. This type of review will allow you to put yourself in a better tax position for the year.
3) Do you have carryover losses from previous years on your tax return? You may want to take some profits in some of your holdings if you have carryover losses reported on your return. The IRS only allows you to take a loss of $3,000 after you net out your gains and losses, so utilizing this strategy will allow you to capture a gain without tax liability to the extent you have a carryover loss.
4) Take a look at your retirement plan(s) and see if you are on course to maximize the benefits of the plan(s). Although you can make IRA, Roth IRA, SEP IRA contributions in 2018 for 2017, your 401(k) contributions (in most cases) need to be contributed in the 2017 calendar year. You should review the extent to which you have contributed this year vs. the maximum contribution allowed ($18,000 if you are under 50 years old, and $24,000 if you are over 50). You may want to increase this contribution towards the maximum if you are going to be in need of a tax deduction.
5) Stay alert.....Tax reform is being spoken about on almost a daily basis at this point. There have been debates as to whether this reform will go through in 2017, retroactive back to January 1, 2017, or will we see it passed in 2018. It is important to stay alert because we do not know what tax reform will look like or what it will mean to you because it is so fluid at the moment. You will want to know what it means for you when (or if) it is passed. Pay attention because this may have an impact on your tax obligation for 2017.
Mitlin Financial, Inc. believes that working with a team is an important part of getting the best outcomes for our clients. It is important that the strategies above are reviewed and evaluated for your own personal facts and circumstances. Being that we do not provide tax advice, we welcome the opportunity to work with your CPA to review your situation and make sure that you are doing everything you should be in order to be prepared for your 2017 tax filing and mitigating the tax impact from your investments as well. Be sure to contact us regarding your own situation as we enter the end of the year. Feel free to give us a call at (844) 4-MITLIN x12 and allow Mitlin Financial, Inc. to facilitate your financial future!
Disclaimer: This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.