Personal Finance

The Dos and Don’ts of Year-End Tax Moves

Senior Estate Planner, Mike Repak, explains what should and shouldn’t be done in year-end tax moves.


Do Consider Postponing Taxes

  • Make retirement plan contributions to 401(k) and IRA accounts. An earlier proposal in the House would have sharply reduced the deductible contributions allowed in the future. This idea could be brought back before the bill is finalized. Income you would have been taxed on this year can be postponed until later (retirement).
  • Consider enrolling in a Health Saving Account (HSA). If you’re eligible, you could shelter $3,400 of income ($4,400 if you’re at least 55).
  • Take installment payments for the sale of property. By taking the payment in installments over multiple years, you postpone the current year tax burden of a lump-sum payment.
  • Take advantage of any flexibility in the payment of compensation (e.g., bonuses) or other income events. Delaying income past year-end could give you interest-free use of the money that you will need to pay the related taxes until April 17, 2019.

Do Take Your Required Distribution from IRA and Inherited IRA Accounts
  • Distributions are required from IRA accounts once the owner reaches age 70 ½. The IRS will assess a whopping 50% penalty on the amount that should have been taken if you miss your required distribution. You may want to use your year-end tax planning to consider steps to minimize future required minimum distributions. Depending on your current facts and future plans, it might make sense to consider a Roth conversion to create a stream of tax-free income for yourself.
  • Same goes for inherited IRAs. The required distribution must be taken by year-end to avoid a penalty. 

Do Understand if the Alternative Minimum Tax (AMT) Applies to You
  • Talk to your CPA or tax consultant to determine if AMT applies to you. This tax depends not only on your income but also the amount and type of deductions you take in a given year.
  • If you are subject to AMT, you might want to consider postponing deductions that will be disallowed because of AMT.
  • If exercising any Incentive Stock Options will cause you to generate AMT credits that you won’t be able to use in the future, you might want to delay exercise.
Don’t Forget to Drain Flexible Spending Accounts
  • Flexible Spending Accounts (FSA) are “use it or lose it” accounts. This means by yearend, the balances should be brought to $0, otherwise the money in the account is forfeited, but don’t be confused with Health Savings Accounts (HSA) which can be rolled over year-after-year.

Don’t Forget to Complete Gifts by Year-End
  • If you are making gifts to family or a contribution to charity, those transfers generally need to be completed at year-end to be included in your 2017 taxes.
  • For stock, that means the transfer of the asset between accounts must be completed at year-end. Transferring stock can take several weeks, so give yourself plenty of time.
  • If you’re giving a gift to family by check, the check should be cashed before year-end to be considered a gift for 2017.

Do Introduce Your CPA to Your Janney Financial Advisor
  • One way to make sure that you are making all the right year-end tax moves is to introduce your Janney Financial Advisor to your tax advisor. Since your tax situation is unique to you, these two professionals can work with each other on tax loss harvesting, and tax-efficient investing strategies that could help reduce your tax burden now and in the future.
  • For more complex situations, we also offer tax planning as part of any financial or estate plan that we complete for Janney clients.
  • When considering tax implications, ask your Janney advisor and your tax advisor if your different asset types are held in the most appropriate account type for tax efficiency in relation to your particular situation.

Our team of experts can help you identify strategic tactics for year-end planning that you may want to consider or potentially avoid. Contact your Janney Financial Advisor to start the conversation today!

Michael Repak
Vice President/Senior Estate Planner

Mike provides advice and guidance in all aspects of financial, tax, and estate planning issues. He earned his Bachelor’s degree from William Paterson University in Wayne, New Jersey, and has a Master’s degree from the University of Wisconsin in Madison, Wisconsin. He has a CPA/PFS credential, and Series 7 and 66 securities licenses. He received his J.D. from the University of Florida and his LL.M. in Tax Law from NYU.

He has been an adjunct professor in the MBA program at Temple University and is a sought-after speaker for professional conferences and events. He is also frequently featured as a Money Doctor on, the public education site of the American Institute of Certified Public Accountants. Mr. Repak has served on several non-profit and civic boards, is a graduate of Leadership Philadelphia, and a member of the Union League of Philadelphia.

Janney Montgomery Scott LLC, its affiliates, and its employees are not in the business of providing tax, regulatory, accounting, or legal advice. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

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