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By Jacquelyn R. Campbell, CPA/PFS, CFP®

It’s hard to believe that we are already two-thirds through 2017!  Not everyone likes to talk about taxes before tax time, but if you wait until January 2018, all of your information will be historical and it will be too late to change.  One of the most effective ways to reduce your current tax bill is by planning.  That’s why we recommend midyear and yearend tax planning in July and October will allow opportunities to make adjustments before the end of the year.

Life Changes: If you have any life changes this year such as retiring, marriage, divorce, change jobs, sale of your business, and increase in your pay, baby or child going starting college, it is wise to evaluate the impact that will have on your taxes. The change can affect your filing status, income tax bracket, deductions or tax credits, all of which will change your bottom line tax due.

Capital Gains & Medicare Premiums:  How are your taxable investment accounts doing this year?  You may have realized capital gains which will change your tax due for the current year but also may impact your Medicare premiums for 2019.  Your Medicare premiums are determined from your modified adjusted gross income as reported on your tax return 2 years ago.  So you pay the standard premium amount and an Income Related Monthly Adjustment Amount (IRMAA) is an example, if you are single and your adjusted gross income (AGI) exceeds $85,000, your Medicare premiums will increase from $134.00 to $187.50, per month.  So, make sure to consider planning and possible tax loss harvesting to offset the gains before December 31st not only for the current year but for the future Medicare premium costs as well.

Income Tax Payments:  Another item to check is your federal withholding from your paycheck or retirement distribution and your estimated tax payments to avoid paying too little or too much.  Not paying in enough tax or not paying tax equally each quarter may result in an estimated tax penalty.  The quarterly estimated tax payment due dates for 2017 are:  April 15, 2017, June 15, 2017, September 15, 2017 and January 15, 2018.

Retirement Plan Contributions:  Are you participating in an employer retirement plan?  If so, are you contributing the maximum for your income and plan?   For a 401(k) or 403(b), the maximum employee deferral is $18,000.00.  A Simple IRA Plan maximum employee deferral is $12,500.00.  If you are over 50 years of age, you can contribute an additional amount of $6,000.00 (401(k) or 403(b)) or $3,000 (SIMPLE) for the makeup contribution.  The bottom line is to defer as much as you can afford to your retirement plan that makes sense for your overall income and tax deductions.

Annual Gifting:  If you have no significant life changes in your income or tax situation this year.  Midyear is still a good time to do some tax planning.  Consider ways to reduce your estate value by gifting money to your children and grandchildren or ways you can save more for your retirement.

Prior Planning Pays and if no changes are necessary, at least you will not have surprises at tax time.


Investment Advisor Representative of Retirement Wealth Advisors Inc. (RWA), 89 Ionia NW, Suite 600, Grand Rapids, MI 49503 (800) 903-2562. Investment Advisory Services are offered through RWA. Campbell and Company, Certified Public Accountants and Financial Advisors and RWA are not affiliated.

This information is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement.