December 3, 2017 9:09 pm

5 Year-End Tax Tips for 2017

As the year is winding up, there’s still time to take actions that can pay off when you file your return. The clocking is ticking…

1. Review your gains and losses.

The final trading date on the stock market is December 29. You have until this date to review your actualized gains and losses as well as your paper gains and losses. Decide whether you want to sell anything else before the end of the year. Keep these points in mind:

  • If your losses exceed your gains, you’ll be able to offset up to $3,000 of ordinary income ($1,500 if you’re married and file separately). Excess losses will carry over for future years.
  • With the impressive year that the stock market has had, expect to receive year-end capital gain distributions from your mutual fund holdings.
  • Watch for the wash sale rule that bars a loss deduction if you acquire substantially identical securities within 30 days before or after the date of sale.

2. Make charitable contributions

If you itemize, you may want to make year-end contributions to IRS-approved organizations. Keep these points in mind:

  • You can charge contributions to a credit card by December 31 and deduct them this year even though the credit card bill isn’t paid until next year.
  • You can mail contributions before the end of the year and deduct them in 2017 even though they are received by the charitable organization in 2018.
  • You must obtain a contemporaneous written acknowledgment from the organization for a donation of $250 or more, and receipts or canceled checks for smaller donations.

3. Use up FSA contributions

If you put money into a medical or dependent care flexible spending account for 2017, you must use it or lose it. Check with the plan administrator to see whether there’s any grace period (e.g., to March 15, 2018) in which you can use up your 2017 contributions. For medical FSAs, find out whether there’s a carryover of up to $500 in lieu of a grace period.

4. Pay last minute tax-deductible expenses

If you itemize and already have spent more than 10% of your adjusted gross income out of pocket for medical costs, make any additional discretionary payments. For example, order contact lenses for the coming year if they aren’t covered by insurance. Prepay part of the coming year’s nursing home bill for a spouse (assuming that you can get a refund if it’s not fully used).

Prepay college tuition for a semester starting in January, February, or March 2018, if you are eligible to take the American opportunity credit. You’ll get the credit on your 2017 return.

5. Withholding and estimated taxes

If you anticipate that you’ll owe taxes when you file your return, you may avoid underpayment penalties by asking your employer to withhold a lump sum from your final paycheck. If you don’t have a paycheck, you’ll need to adjust your final estimated tax payment for 2017, which is due on January 16, 2018.

Conclusion

Talk with your CPA or other tax adviser about other savvy tax moves you can make before you ring in the New Year.